Samsung set to challenge Apple Pay

By Bahk Eun-ji

Samsung Electronics’ acquisition of LoopPay, a mobile-payments technology startup, reflects its strategy to enable the new Galaxy S6 smartphone compete more effectively against Apple’s iPhone 6.

The company plans to unveil the S6 on March 1, and the acquisition announced last week, signals its plan to offer “Samsung Pay,” a new mobile payment system.

“This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce. 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,” said Shin Jong-kyun, co-CEO and head of Samsung’s mobile business in a statement.

The company didn’t disclose the terms of the deal, but Samsung expects it to increase customers’ ability to pay for products and services with the S6.

Analysts say Samsung is seeking to boost its presence in the global mobile payment market not only through LoopPay but through other localized systems.

“Smartphone manufacturers can secure loyal customers when their devices play a key role in mobile payments,” said Lee Sung-bin, a technology analyst at Kyobo Securities.

Samsung has cooperated with Westpac and Commonwealth Bank of Australia, Russian Standard Bank, and UnionPay in China to offer NFC payment services.

“Global IT giants now think they can provide different ICT products with mobile payment services,” said Kim Jong-dae, a senior researcher at the LG Economic Research Institute.

It will help them dominate the wearable devices market, he said.

LoopPay possesses magnetic secure transmission-related technology. It is a U.S.-based mobile wallet solution startup.

The mobile wallet can incorporate Android as well as an iOS smartphone apps.

The app saves users’ payment information, and it can either use smartphones with near field communication (NFC) functions or devices with LoopPay to make payments.

The technology allows mobile payments with existing magnetic credit card readers. For example, when users load their credit cards into their smartphone having the LoopPay function, they can swipe the phone to buy products.

Shop owners don’t have to set up a new terminal for the system, and the LoopPay technology works with most regular magnetic credit card readers, so it can work in a lot more places.

Industry observers say the acquisition is a big move Samsung made to compete with Apple Pay in the global mobile commerce market.

At the end of last month, Apple CEO Tim Cook said this year will be “the year of Apple Pay.”

He also noted the service has continued to add financial institutions to its partners _ currently up to 750 banks and credit unions. It reflects part of his belief that Apple Pay could be a strong catalyst for consumers by allowing them to use their iPhones on payment terminals.

Unlike LoopPay, both iPhone and payment terminals must have the NFC chips in order to make payments.