I guess we could all see this coming – Samsung is discussing a deal to form their own wireless mobile payment system to compete with rival Apple’s own Apple Pay, as well as Google’s Wallet. Through nobody from Samsung or LoopPay would say anything on record, it appears that Samsung is having discussions with a Burlington, Massachusetts’s based startup, LoopPay…and it is not clear if any deal has been reached. One source said that there are already working Samsung smartphone prototypes testing the system.
For the past couple of years, smartphone manufacturers have been trying to get the vendors to accept payments from their wireless mobile devices rather than carrying a separate credit card that must be either swiped or ‘passed over’ a terminal. They have been reluctant up until now, but with Apple finally including its own proprietary, Apple Pay on its new iPhone 6 and 6 Plus, now they cannot scramble fast enough to accept mobile payments. The problem with Apple Pay is that the vendor must update their current system to accept Apple Pay.
The LoopPay does not require any additional outlay by the vendor – they can use their existing card-swiping machine. LoopPay’s system sends out a magnetic field that duplicates the magnetic stripe on the card, it sends that signal to the magnetic card reader, and it picks it up as though a card was swiped. When Re/code’s Walt Mossberg test LoopPay earlier this year it worked in 10 out of 13 of the stores he visited – all with their current equipment.
Our source said that “Graylin, LoopPay’s CEO, told Re/code earlier this month that his company’s technology would be embedded into a mainstream smartphone in 2015 that would have “massive penetration”. He declined to name the phone maker then, and declined again when asked about the Samsung discussions”. Other than Apple, Samsung seems like the only manufacturer that could pull off “massive penetration”. Graylin also said that payments would be able to be made via NFC as well as LoopPay’s current technology, which would cover all of the bases. Adding NFC could also benefit LoopPay as well as merchants update their POS equipment to accept NFC payments and eventually do away with card swiping.
Merchants will eventually phase out card swiping as security issues are bringing about a more secure chip-embedded cards that are already used heavily in Europe and are less susceptible to cloning. Graylin said that LoopPay was in discussions with financial services companies, such as Visa – an investor in LoopPay – to look for ways to make transactions more secure. They hope to use a system known as ‘tokenization,’ which is the type of secure paying method that Apple Pay employs. The merchant never receives or stores the actual payment information. If Samsung and LoopPay can cut a deal, it would be a big boost for both companies. Below is a video put out by LoopPay that details their current system.
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https://www.youtube.com/watch?v=bw1l149Rb1k