Samsung has agreed to acquire mobile wallet solutions provider LoopPay to accelerate its mobile payments efforts. LoopPay will remain independent but will work closely with Samsung’s Mobile Division.
Founded in 2012 in the US, LoopPay uses Magnetic Secure Transmission (MST) technology to turn retailers’ existing magnetic stripe readers into contactless payments receivers. It claims to be accepted by over 10 million merchants – over 90% of retail locations in the US.
LoopPay’s products and features include:
- LoopPay CardCase ($59.95), which holds a removable LoopPay Card using Bluetooth Low Energy (BLE) for connection. The Card is compatible with iPhones (iPhone 5 or newer) and Android smartphones (Android 4.3+). It also provides LoopPay Fob for keychain and ChargeCase.
- Users need to purchase a LoopPay accessory and download the LoopPay App to manage and digitally store debit and credit cards, IDs, and loyalty and gift cards.
Samsung’s handset revenue has been declining in 2014 in contrast to Apple’s biggest quarterly earnings in the latest quarter. To offset loss, Samsung has been investing into software, from launching Samsung Wallet in 2013 to the acquisition of SmartThings in 2014. It has also previously been involved in payments, partnering with Visa in 2013 to preload payWave onto its NFC devices.
Samsung has been an investor in LoopPay since July 2014, along with Visa and Synchrony Financial. The acquisition will pave the way for Samsung to integrate LoopPay’s technology into its devices, the latest of which are expected to launch in Mobile World Congress in March.
With the new technology, Samsung is taking on Apple Pay, which currently only works at 220,000 retail locations in the US on the newer Near Field Communication (NFC) terminals. In comparison, with LoopPay’s technology, users only need to place the LoopPay device near the existing magnetic readers used for swiping cards. This means merchants wishing to utilise this technology will not need to invest in new POS terminals. Other than buying a new accessory, consumers will not have to change their purchasing habits to pay with LoopPay.
However, unlike Apple Pay, Samsung does not have a significant portion of its consumers’ payment cards associated with Samsung accounts. Apple users have been paying for digital purchases using their Apple accounts since the early days of iTunes, and thanks to its success with its App Store; Apple has accumulated 800 million accounts most of which have associated payment cards. Despite multiple attempts, Samsung has not had the same success with its application store and content services, and will not have the same starting eligible user base.
Previously, Samsung Wallet has mainly been used for storing coupons, tickets and boarding passes. Having LoopPay’s technology could help Samsung gain traction for its mobile wallet service. However, POS terminals in the US are set to be replaced by EMV standard chip-and-pin by October 2015, which will also increase the number of Apple Pay compatible POS terminals. As LoopPay currently only supports swiping signals, it is likely only a short-term solution for an evolving payment issue.