Samsung’s LoopPay Deal Buys Quick Path to Mobile Payments, Pressure for Apple Pay? (Feb. 19, 2015)
Samsung this week announced its purchase of mobile payments startup LoopPay, taking over its technology that enables magnetic stripe cards to be processed as contactless transactions at traditional payment terminals. The approach skirts NFC, so users can tap to pay at most POS locations. Integrating with LoopPay could give Samsung an immediate leg up in the mobile payments race, observers say. “A magnetic stripe mobile payment service would work on all payment terminals and would exceed Apple Pay’s immediate usage numbers,” Sirpa Nordlund, executive director of mobile payments association Mobey Forum, wrote in a recent Paybefore blog post.
LoopPay uses a patented “Magnetic Secure Transmission” technology to convert magnetic stripe card data into a format that works for enabling contactless payment via LoopPay’s app with iOS and Android devices. To load card data into the app, consumers must use a key fob or card case device, sold separately. The Korean phone manufacturer didn’t disclose how it plans to distribute the small peripheral device but observers note it could build the feature into Samsung’s future handsets. The fob recently was available to consumers for about $40.
Samsung’s tie-up with LoopPay is not likely to blunt NFC adoption, but it could serve as a “bridge technology” to accelerate mobile payments adoption, Deborah Baxley, a principal with Capgemini Financial Services, tells Paybefore. “LoopPay provides healthy competition for Apple Pay and an alternative for Android devices. But LoopPay requires a separate device or phone case, which is an impediment, and it’s not EMV compatible yet,” she says.
Samsung—along with Visa—is an investor in LoopPay. Terms of the deal were not disclosed.
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