The mobile payment industry may have taken a seismic shift yesterday when Samsung announced it would acquire LoopPay for an undisclosed amount of money. The acquisition is seen as a major move by the South Korean company to compete with Apple Pay.
LoopPay claims to already work with approximately 90% of retailers, an estimated ten times more than Apple Pay’s current viability. Samsung could also deploy LoopPay to the entire Android platform.
What sets LoopPay apart from Apple Pay as well as Google Wallet is its ability to interact with the payment systems that most retailers currently have in place. It does this by wirelessly mimicking the magnetic stripe on the back of your credit card. When you hold the LoopPay case near the credit card swipe slot and press the LoopPay button, it sends an electromagnetic pulse with your credit card number to the credit card reader.
Apple Pay and Google Wallet require special NFC, or near field communication, readers.
In a recent Consumer Reports review, LoopPay was given higher overall scores than Apple Pay, Google Wallet and Softcard, mainly because of its wide spread acceptance.
One concern with LoopPay is what will happen when the United States starts to switch to chip and pin technology in credit cards in 2015. This new technology will make it harder for crooks to make counterfeit credit cards since a transaction will not just require your credit card number but a number issued by a chip embedded in your physical credit card. LoopPay has promised that future upgrades will handle chip and pin as well as other security measures.
Will Graylin, CEO of LoopPay is thinking about security in the future of LoopPay and was quoted as saying, “We’re adding biometric as well. What you will see in the next version is that we have added a fingerprint-sensor for convenience and security. We’ve also been working with major payments players like Visa and big issuers to extend those same tokenization capabilities on to the LoopPay platform.”
The fit between Samsung and LoopPay was natural as the phone maker was in need of an answer to Apple Pay to remain relevant. With this significant acquisition, Samsung may have instantly become the mobile payment leader.