VentureBeat reported Wednesday (Feb. 18) that Samsung had bought mobile payment company LoopPay for an undisclosed amount.
If you're unfamiliar with LoopPay, the company's demo video (embedded below) does a good job of showing the product's value.
The best thing about LoopPay: It works with existing payment terminals without any hardware changes.
The best thing about LoopPay is that it works with existing systems without any hardware changes. It seems that virtually any mag stripe reader should read the card. The other great thing is that this could operate similar to Apple Pay and provide one-time use codes rather than sending the actual card information. This, again, could operate with existing hardware.
On the other hand, LoopPay's main weakness is it requires a bulky case (or a separate keyfob) to achieve its payment goals. In the future, if the technology is built into a Samsung phone, this would not be an issue.
In addition, LoopPay may run into issues where EMV chip-and-pin becomes a mandated solution in the U.S. In markets where these solutions are already present, there is little need for a card swipe and the technology may be redundant.
Apple Pay likely has more potential, particularly if NFC tap-to-pay technology becomes the industry mobile payment standard.
When compared to Apple Pay, I think in the U.S. market, LoopPay has an advantage in places it is currently accepted. However, Apple Pay has more potential and I feel is the better technology to use. Depending on the card swipe in use, LoopPay may not work where Apple Pay and the terminals are designed to be compatible. I also think that Apple Pay also has a brand advantage and it is likely to be in more phones sooner than LoopPay which will give it a head start.
On the Android side, there are already other mobile wallet solutions and as EMV rolls out, these will be more useful. Because LoopPay is not NFC-enabled, I think that Samsung has a limited time to make something of this acquisition in order to sway the direction of the payment industry as well as legislators. If consumers and merchants adopt something, it will be hard to change and fragmentation is never a good thing. Also, one technology should likely win out in time and this seems a little more like a stopgap than the thing to move forward with long-term.