Last December there were reports that Samsung was planning to launch its own mobile payment service and was in talks with LoopPay, a Burlington, MA-based startup. The LoopPay mobile payment system was also tried out successfully on a Samsung phone. Now the Korean giant has announced that it has acquired LoopPay, signaling its intention to take on Apple Pay that was launched in September last year.
Unlike Apple Pay and other mobile payment services that use NFC connectivity, LoopPay uses ‘Magnetic Secure Transmission Technology’ in which information that is stored on the magnetic stripe of a debit or credit card is transmitted wirelessly to the checkout terminal of the store. This Technology converts the magnetic stripe card reader of the store into a receiver. The LoopPay card can be stored inside the smartphone case and the user just has to tap his/her phone to the terminal to make the payment.
Samsung’s acquisition of LoopPay poses a great competition to Apple because about 90% retailers in the US have magnetic stripe readers at checkout counters that support LoopPay. In comparison, there are only a few locations that support Apple Pay because retailers need to upgrade their system for it. LoopPay on the other hand uses technology that already exists in the stores. It is worth noting that LoopPay’s system is already supported by over 10 million retail outlets while Apple Pay is available at only about 220,000 retail outlets as yet.
According to David Eun, head of Samsung’s Global Innovation Center, “If you can’t solve the problem of merchant acceptance…, of being able to use the vast majority of your cards, then it can’t really be your wallet.“
Injong Rhee, in charge of the mobile payments project for Samsung, revealed that Samsung Galaxy S6 will support the service. He also said that Samsung doesn’t want to limit itself by “merely turning the smartphone into a wallet” but go beyond that and offer other money transactions and payment-related services such as providing information about spending etc. to the users. LoopPay’s technology fits nicely with Samsung’s strategy.