Samsung is positioning itself to compete with Apple in the payments space. The consumer electronics company recently acquired mobile payment firm LoopPay in an effort to rival Apple Pay. As the competition ensues for the top spot in the mobile payment space, it seems Samsung is now well-prepared to appeal to consumers and retailers alike as new Galaxy phones will include LoopPay’s digital wallet.
Samsung’s mobile devices will feature LoopPay’s new digital wallet
USA Today reported that Samsung acquired Boston-based mobile payment company LoopPay for an undisclosed sum. LoopPay is a mobile payments solution that is compatible with point-of-sale devices that work predominantly with magnetic stripes and do not have near-field communications technology. Industry analysts expect that upcoming Samsung Galaxy smartphones will feature a new iteration of the LoopPay’s digital wallet. Loop co-founder Will Graylin expressed his positive sentiment regarding the corporate transaction.
“Today is a great day for LoopPay and all those who have supported us over the last few years,” said Graylin, according to the news source. “Our vision of inspiring consumers to transition from a physical wallet to a truly digital wallet will continue.”
Reuters noted that LoopPay’s technology is special because it can turn existing magnetic stripe readers into contactless receivers. No additional investment in infrastructure would be necessary for merchants, and the transactions would be secure as well. Samsung phones that are capable of contactless payments are well-positioned to compete with Apple Pay.
Samsung and LoopPay have a strategic partnership to compete with Apple Pay
According to USA Today, LoopPay executives will work closely with Samsung’s mobile division. Since LoopPay works with 90 percent of point-of-sale devices, Samsung phones equipped with the new digital wallet could pose a potential threat to Apple Pay. Some retailers have been reluctant to upgrade their sales terminals, and if LoopPay becomes popular with consumers, they may not have to do so after all. JK Shin, the president and head of IT and mobile for Samsung Electronics, commented that the acquisition of LoopPay helps the company achieve its goals in the mobile payment space.
“This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce,” said Shin, according to the news source. “Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal.”
Beating Apple Pay isn’t easy but Samsung will try
Apple Pay was introduced to the market in September 2014 with the release of the iPhone 6 and 6 Plus. The upcoming release of the Apple smartwatch will also make the Apple Pay more widely available for consumers. eMarketer noted that smartphone mobile payments in the United States were worth approximately $3.5 billion in 2014. By 2016 however, that number is expected to grow to $27.5 billion, reported USA Today.
Reuters explained that while Apple Pay allows iPhone users to purchase items by simply waving their phones near near-field communications enabled equipment, the success of the technology is dependent on the retailers’ willingness to upgrade their sales terminals and embrace NFC technology.
Samsung’s mobile payment service will have particular appeal to retailers
eMarketer analyst Bryan Yeager reiterated the view that the strength of Samsung’s digital wallet will be the appeal it has for retailers who have not upgraded their point-of-sale devices, reported USA Today.
“Samsung’s acquisition of LoopPay signals how serious it is about building and launching a competitive mobile payments system in the United States,” said Yeager, according to the news source. “It also likely gives Samsung exclusive access to LoopPay’s technology, which enables mobile payments to be made at merchants who haven’t upgraded their point of sale technology to support newer contactless payment methods like NFC – of which there are many.”
Ultimately, the mobile payment space is appealing to many technology companies. While Apple Pay is poised to become the preeminent mobile payment service, is highly likely that other players will compete for that title. Samsung and Apple are the two most popular smartphone makers, so accordingly, it is not surprising that Samsung has made moves to compete with Apple Pay. Based on the what is known so far, the company may have a good chance of capturing some market share very soon.Back To Blog