Samsung Moves Into Mobile Payments, Buys LoopPay
Mobile payments is a hot area. Apple, Google, and Paypal have already dived into it, looking to offer safe and reliable service for digital transactions using smartphones. The only big name that has been missing from the list was Samsung, but looks like it would not be the case anymore.
Samsung Electronics has bought US-based mobile wallet startup LoopPay, which indicates its intentions of offering a mobile payments service to compete with Apple Pay.
Despite being backed by big companies like Apple, Google, and eBay’s Paypal, mobile payments have not seen rapid adoption by merchants and consumers. The major reason behind slow uptake of the services offered by these companies is that they require additional hardware and software infrastructure to work. Moreover, these services need to offer much more convenience to the users if they are to be convinced to ditch traditional credit cards in favor of mobile payments. But they fail to do so, Samsung executives said on Wednesday.
“If you can’t solve the problem of merchant acceptance…, of being able to use the vast majority of your cards, then it can’t really be your wallet,” said David Eun, head of Samsung’s Global Innovation Center.
LoopPay’s service solves this problem by offering mobile payments service without using additional infrastructure. It changes existing magnetic-stripe card readers at checkout into contactless receivers, making them work with smartphones. Since about 90 percent of checkout counters already support magnetic swiping, this mechanism makes the service easier to adopt.
Samsung has not announced its service as of yet. But Injong Rhee, who is leading the company’s mobile payments project, said that more details will be revealed soon. He also said that this year’s flagship Galaxy S6 will support the service.
Apple Pay was launched in September last year. It allows iPhone users to pay by simply tapping a button. Although it is offering a very easy-to-use service and it has been adopted by more than 2,000 banks, it still requires retailers to install near-field communication. Hence, retailers have been reluctant.
It is yet unclear how Samsung’s service would operate and how it would differ from current mobile payments services. But judging from the acquisition of LoopPay, we can infer that Samsung is looking to offer a service that would not require additional hardware and software, thereby making it easier to adopt by retailers and consumers.
We can expect a completely different service from those we have today. As Rhee pointed out, “It’s about changing user behavior, it’s not about who’s first in the market.”