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LoopPay Inc., the mobile payments company that relies on magnetic fields to connect devices to point-of-sale terminals, has a new owner: Samsung Electronics America Inc.
The deal, announced in an email to LoopPay users, all but confirms that smart-phone maker Samsung has plans to launch what has been a much-rumored mobile-payments service. In January, neither company would comment on the possible scheme.
Indeed, LoopPay chief executive Will Graylin offered little insight in the email or on his company’s Web site. Nor were price or other terms of the deal immediately available. Graylin referred a request for comment to a public-relations contact. Samsung sources were not immediately available for comment.
In his email, Graylin says LoopPay’s vision of a digital wallet will continue intact, thanks to Samsung. “I’m most excited that Samsung shares this vision and has chosen to help change how we shop and pay for goods and services,” Graylin notes.
LoopPay, which is available only in a separate fob or a case that attaches to many phones, uses a wallet that works by sending a signal that exploits the same magnetic field at a POS device that any mag-stripe card uses. In this way, LoopPay devices can be used at most POS terminals. Wallets like Apple Pay, by contrast, rely on near-field communication (NFC), which so far is restricted to contactless devices at merchant locations.
Samsung’s Galaxy S6, the next version of its flagship smart phone, is expected to be announced at the Mobile World Congress event March 2-5 in Barcelona, Spain. The current version of that device contains an NFC chip.
Should Samsung also announce a mobile-payments service incorporating LoopPay’s technology, it may use wider merchant acceptance as a way to distinguish itself from Apple Inc.’s Apple Pay, which has generated significant consumer and merchant interest, but still can only be used at about 220,000 POS terminals.
“My guess, from a marketing perspective, is they will hammer home on acceptance,” Bryan Yeager, an analyst at New York-based eMarketer Inc., tells Digital Transactions News. “The technology is pretty novel in terms of their approach to get acceptance among a very broad population of merchants.”
The risk, however, lies in whether a mobile-payment scheme that relies on magnetic-stripe technology is too late, Yeager says. The U.S. payment card industry is migrating to the EMV chip card standard, which over time will replace the mag-stripe in favor of a chip embedded into a credit or debit card, which must be dipped into the terminal to complete a transaction. In the short run, however, cards will be issued with both mag stripes and chips.
“Retailers are already going to have to upgrade their POS technology,” Yeager says. “Those POS terminals more than likely are going to accept NFC.”
If Samsung intends to use the broader acceptance capability of a LoopPay-powered mobile payment scheme, Yeager wonders how long that differentiation might last. “Had they done it a year ago, it would have been more compelling,” he says.
