Samsung Electronics acquires US mobile payments firm LoopPay

Samsung Electronics has acquired US mobile payments firm LoopPay in a bid to take on  Apple Pay mobile payments system, PC World reported.

LoopPay makes small add-on devices for smartphones that transmit credit card information working with a mobile app. Users can hold the devices within a few centimeters from a traditional magnetic strip readers to transmit the information wirelessly to make a payment.

The devices work by creating magnetic fields that simulate those generated with a magnetic strip. The Magnetic Secure Transmission (MST)  technology as it is called, effectively turns card readers into contactless payment devices without modifications.

The technology differs from NFC (near field communication) used in Apple Pay, which requires retailers to have contact-less payment terminals capable of accepting NFC signals.

Massachusetts-based LoopPay says its solution would work at about 90 per cent of point-of-sale terminals in the US, which would give Samsung an advantage in mobile payments.

''NFC is currently only available in less than 10 per cent of US retailers despite NFC's mobile launch almost a decade ago,'' a Samsung spokeswoman said via email. ''MST solves the merchant acceptance issue that has prevented other mobile wallet solutions from reaching mass adoption.''
 
Meanwhile, Reuters reported that with the acquisition of mobile wallet startup LoopPay, Samsung had announced its intention to launch a smartphone payments service.

Mobile payments had not gained much acceptance in the US and elsewhere, despite strong backing. Apple, Google, and eBay's PayPal had all launched services to allow users to pay in stores via smartphones.

The weak adoption was partly due to the reluctance of retailers to adopt the hardware and software infrastructure required for these new mobile payment options. According to Samsung executives, these services also failed to offer added conveniences than simply swiping a credit card.

According to David Eun, head of Samsung's Global Innovation Center, it the problem of merchant acceptance could not be solved and if users were not able to use the vast majority of cards, then it could not really be called one's wallet.