Samsung, one of the primary Google Wallet partners, announced in late February that they would acquire mobile contactless payment platform and wallet LoopPay, which uses a proprietary phone case or keychain fob to transmit payment information to traditional point-of-sale payment terminals using patented Magnetic Secure Transmission™ technology. Terms of the acquisition, which has potential to shakeup the mobile wallet market, were not disclosed.
LoopPay, based in the Boston, Massachusetts area, will be a wholly owned subsidiary under Samsung Electronics America while co-founder and CEO Will Graylin will continue to lead the LoopPay organization in addition to becoming a co-GM for Samsung payment solutions.
LoopPay is a unique mobile point-of-sale payment solution. Rather than relying on NFC or QR codes it works with traditional payment terminals that read standard, magnetic-stripe payment cards. Their patented Magnetic Secure Transmission™ (MST) technology communicates payment card information to the mag-stripe card reader by emulating the same magnetic field changes as a card when it is swiped. The phone case or fob needs to be within 3 inches of the payment terminal and can transmit the needed payment information, with the major benefit being that merchants do not need to upgrade their POS systems. While Apple Pay and other mobile payment systems rely on NFC, which is still limited in terms of merchant acceptance or support, LoopPay can be accepted by 90 percent of merchants in the U.S. today.
Another difference with LoopPay is how cards are entered into a mobile device to be added to the wallet. Using a dongle that plugs into the mobile device, consumers swipe their cards to store them and later use them with LoopPay. One area where Samsung may look to improve LoopPay, however, is with security. Whereas Apple Pay transmits payment tokens for mobile payments LoopPay transmits the 16-digit primary account number (PAN). Additionally, merchants with EMV payment terminals would still need to handle the card directly to avoid the liability for fraud.
While this is what LoopPay is today, there is less uncertainty about what it will be like in the future following the acquisition by Samsung. Samsung has included NFC technology in many of their smartphones, tablets and wearables. While LoopPay provides a viable alternative to NFC that consumers can use most anywhere to make payments today, a transition to NFC or a hybrid approach of LoopPay’s MST technology and NFC may be incorporated in the future. David Eun, Samsung EVP, commented that the company is “looking into actually building this solution into smartphone hardware.” LoopPay also makes a series of payment enabling smartphone cases designed for various iPhone models today, but CEO Will Graylin would not comment on future plans or if they would continue to offer these products.
This acquisition may also signal that Samsung is hedging their bets to be part of the future or mobile payments, with or without Google. Samsung was an early partner with Google Wallet and made the first devices that supported Google Wallet for NFC mobile payments. There have been rumors of tension between Google and Samsung with regards to their mobile payment partnerships for some time. Although Samsung released a statement supporting Google’s acquisition of Motorolla, it is rumored that this was a source of friction.
It is likely that Google is not thrilled with Samsung’s recent acquisition, but they have also made plans of their own. Google recently partnered with and acquired technology and patents from Softcard, the wireless carrier’s joint venture mobile wallet, and the company plans to launch a new version of Google Wallet which will be unveiled at their developer conference in May.
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