Samsung has finalized its acquisition of LoopPay, a startup company specializing in mobile payment systems. It really does appear now that the South Korean tech giant is making a move to compete directly with Apple Pay, the mobile payment system developed and released by Apple last year.
No details regarding the terms and conditions of the buyout were revealed when Samsung announced the buyout just recently. But the South Korean phone maker did state that considering past collaborations between Samsung and LoopPay, the acquisition of the startup is not entirely unexpected.
The timing could not have been more right. According to sources, Samsung is looking forward to introducing a new mobile payment system alongside its unveiling of its latest flagship device, the Galaxy S6, this coming March 1st.
LoopPay specializes in turning card magnetic strip readers into contactless payment receivers, essentially allowing retail stores to accept mobile payments without having to change or replace their point-of-sale (POS) machines. With Apple Pay, the POS machines are required to be equipped with near field communications (NFC) technology, which is needed to facilitate data sharing between two devices that are held in close proximity to each other. So if retailers want to support Apple Pay (and other NFC-based mobile payment systems like Google Wallet for instance), they would need to make upgrades to their existing POS machines.
Herein lies the advantage of LoopPay. As claimed by Samsung, LoopPay's technology has the potential to work in about 90 percent of all POS machines working today. And it has some flexibility too -- like Apple Pay, it can also work through NFC and by tokenizing credit card payments.
This latest move by Samsung not only gives it an opportunity to compete head on with Apple Pay, but also provides a new source of revenue. The South Korean company has been hit with some setbacks lately, specifically slow sales and increasingly tough competition from Chinese phone makers. If it can introduce a service that goes well with its Galaxy S6 flagship release (and one that its customers could really find useful), it just might put itself in a good position to bounce back from a lackluster 2014.
It will not be easy though. Since its release last year (together with iPhone 6 and the iPhone 6 Plus), Apple Pay has been doing really quite well. As of this writing, some 750 banks and credit card institutions already support Apple Pay, not to mention over 200,000 payment terminals that already work with Apple's mobile payment system. It is difficult for now to ascertain when or if Apple Pay's momentum will slow down. If Samsung is to make a comeback in 2015, it is going to have to dig deep and maintain a laser-like focus to pull it off.
