One of the biggest buzzwords these days is mobile. Technologies, marketers, bankers and everyone in between are trying to reach consumers through their portable devices. Samsung is moving into the mobile payments space, buying a competitor to Apple.
Shara Tibken had this story for CNET:
Samsung has acquired mobile payments startup LoopPay, as good a sign as any that it will soon launch a competitor to Apple Pay.
The company didn’t disclose the terms of the deal Wednesday but said it stemmed from an existing partnership with LoopPay. Samsung plans to show off a new mobile payments offering at its Galaxy S6 smartphone launch on March 1, according to sources.
“Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal,” JK Shin, Samsung co-CEO and head of the company’s mobile business, said in a press release.
LoopPay’s technology turns existing card magnetic strip readers into contactless payment receivers, making it easy for retailers to accept mobile payments without changing their existing point-of-sale terminals. By comparison, Apple Pay requires POS terminals to be equipped with NFC (near field communications) chip technology, which allows information to be shared when two devices are held close together. Retailers have to upgrade their systems to take advantage of Apple Pay, Google Wallet and other NFC-based systems. In the case of Apple Pay, users simply tap an iPhone to a payment terminal and then touch the phone’s fingerprint sensor to authorize a purchase. iPhone users also can pay for items in apps and online with a finger touch.
USA Today’s Mike Snider reported that LoopPay’s co-founders would continue to work at Samsung:
“Today is a great day for LoopPay and all those who have supported us over the last few years,” said co-founder Will Graylin on the company’s website Wednesday. “Our vision of inspiring consumers to transition from a physical wallet to a truly digital wallet will continue.”
Graylin and fellow co-founder George Wallner will work closely with Samsung’s mobile division, the company said in a press release. Samsung cited LoopPay’s technology, which can work with 90% of current point-of-sale retail terminals.
“This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce,” said JK Shin, the president and head of IT and mobile for Samsung Electronics. “Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal.”
Business Insider’s Steve Kovach pointed out that LoopPay’s technology is more universal, giving it an advantage over Apple:
Apple Pay only works with special payment pads that use near field communication (NFC) technology. NFC has been around for years, but relatively few retailers have it on their sales terminals. So far, Apple says Apple Pay is supported at over 200,000 retailers in the US, but major retailers like Target, Best Buy, and Walmart don’t accept Apple Pay and haven’t said if they ever will.
LoopPay, on the other hand, works with standard magnetic credit card readers. The company claims that LoopPay will work at 90% of retailers that accept credit cards. Plus, it works overseas, whereas Apple Pay is only available in the US for now. Once Samsung starts incorporating LoopPay into its phones as it’s rumored to do with the upcoming Galaxy S6, its payments system will immediately be much larger and more widely accepted than Apple Pay.
Apple Pay may be a great system that works flawlessly, but it’s not accepted at enough places to truly replace your wallet. LoopPay brings us much closer to that reality.
Jonathan Cheng wrote for The Wall Street Journal that Samsung’s platform isn’t without its problems:
Analysts say a number of kinks still need to be worked out. But if the technology works as promised, it could give Samsung an edge compared with rivals who have struggled to persuade merchants to upgrade checkout devices to accommodate the near-field communication, or NFC, technology that powers services like Apple Pay and Google Wallet.
Some big U.S. retailers are backing an alternative mobile wallet solution called CurrentC, which will be rolled out this year and relies on a different technology. Some members of that consortium, which include Wal-Mart Stores Inc., Target Corp. , CVS Health Corp. and Rite Aid Corp., have quietly turned off their NFC readers to block Apple Pay and other alternatives.
Apple Pay last month said its service is available at more than 220,000 locations in the U.S.—still just a fraction of the country’s estimated 12 million checkout points. By contrast, LoopPay chief executive and co-founder Will Graylin estimates that magnetic swipe readers are available at 90% of the country’s checkout counters.
“The infrastructure laid out over the last four decades is like the railroad tracks that took decades to lay,” Mr. Graylin said. “We’re building on the existing rails, and it reaches its destination now.”
The competition is heating up in the payments space, and Samsung is making a bold move. Banks, credit cards and other traditional payments systems should take note of these new entrants. How often do you walk around with your credit card in your hand? Your phone?
