The South Korean firm has signaled its intention of taking on Apple Inc. in the mobile payments market with its acquisition of US mobile payments firm, LoopPay. Samsung Electronics alluded to the competitive market by stating that the system of this mobile payment service is accepted at the most number of locations as compared to others. The beauty of this technology is that as compared to Apple Pay, it doesn’t require shops to make any extra investment in regard to system installation. This is due to the fact that the magnetic strip technology that’s used in most credit card terminals in the US is also used by LoopPay’s payment system.
Capital was raised by LoopPay in 2013 through a Kickstarter website and up until now, users had to purchase an external ‘dongle’ or a special phone case for using it. However, usage could be increased if this technology was incorporated in Samsung phones. This would set the stage for a battle between the two largest smartphone manufacturers of the world over competing payment systems. According to an analyst, the only way Samsung can differentiate from Apple Inc. is by acquiring unique hardware. The analyst also said that it seemed as if the South Korean smartphone giant had given up on developing a software ecosystem similar to Apple.
However, it was also said that there would be some problems in the early adoption of the payment system of LoopPay as ‘tokenisation’ encryption technology hasn’t been incorporated in it as it has been done in Apple Pay for preventing fraud. LoopPay had said that it had planned to include it, but no step had been taken for this purpose. It has been forecasted that in the next couple of years, there will be a huge increase in in-store payments via mobile devices. For instance, it has been predicted by Forrester that from the $3.7 billion last year, the US total would increase tenfold by 2019 and reach $34 billion.
Apple Pay has used near-field communications technology, which has existed for a decade, but retailers aren’t willing to upgrade their sales terminals with it in order to promote use with the mobile payment system. But, the popularity of the iPhone has led to an unprecedented adoption by the retailers of the NFC technology. When the iPhone maker launched Apple Pay, it could be used at about 22,000 outlets in the US including Toys ‘R’ Us and McDonalds. The problem is that it is only a small portion of the total shops in the US.
Furthermore, mobile payment systems of PayPal and Google aren’t accepted by major retailers either. In comparison, Samsung has noted that about 90% of the outlets in the US make use of LoopPay’s payment system. The announcement of this acquisition for an undisclosed sum comes just before the South Korean firm launches its latest flagship smartphone on March 1st, which has been rumored to incorporate the payment technology of the US startup. This statement is strengthened by the fact that Samsung said the deal with LoopPay was made in August.