[pedalpete]

In the video they mention that they 'broadcast' it, I suspect that means they are actually pushing out a straight magnetic signal which seems to the reader that a card has been swiped.

I don't think it could be NFC, as most merchant readers wouldn't have NFC built in.

It also explains why they need the special case or dongle, it doesn't appear that it can work with just your phone alone.

It's a pretty innovative hack, but on the security issue, if you card is broadcasting it's data, then I assume anybody can pick it up, but they would need to be REALLY close.

[giarc]

They mention in their video or kickstarter site that you have to be within 4" of the mag reader.