The South Korean Samsung Electronics, on February 18th, 2015, announced that it has agreed to acquire LoopPay, the mobile wallet solutions provider that turns existing magnetic stripe readers into secure, contactless receivers. Samsung has tried mobile payments before - years before Apple Pay, but now the company has made its biggest mobile payment move.
That means, Samsung is again competing directly in the fields where Apple already had an advantage head start.
Mobile payment service feature has generated more interest since Apple introduced its Apple Pay system. Android users have options like Google Wallet, but nothing that compares to Apple Pay's ease of use.
And the case Samsung acquires LoopPay is to its own embedded mobile payment, just like Apple with the release of iPhone 6.
Founded in 2012 in Boston, U.S., LoopPay is accepted at more merchants than any other digital wallet solution. The company has patented Magnetic Secure Transmission™ (MST) technology that turns existing mag stripe readers into mobile contactless receivers without any changes or costs incurred by merchants or their payment processors.
Because LoopPay's technology allows mobile payments through traditional magnetic credit card readers, it can theoretically work in a lot more places than Apple Pay and Google Wallet. Researchers claimed that LoopPay is potentially accepted by 90 percent of POS (point-of-sales) terminals worldwide.
LoopPay's digital wallet can store and use a wide variety of mag stripe cards including debit and credit cards, private label cards, gift cards loyalty cards and rewards cards.
By acquiring the company, Samsung is in its hardest move to compete in the mobile digital payment, a place that is dominated with Apple Pay. With the technology and Samsung's powerful mobile sales, mobile technology, global presence, and distribution capabilities, Samsung is initiating its first big move into the next wave of innovation in the digital smart wallet.
As a part of the acquisition, LoopPay founders and veteran payment industry entrepreneurs Will Graylin and George Wallner will work closely with Samsung's Mobile Division.
"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 JK Shin, President and Head of IT and Mobile Division at Samsung Electronics.
The South Korean company has already has an existing partnership with LoopPay. In 2014, after Samsung sees the potential of it in term of technology, the company invested into it alongside Visa and Synchrony Financial. At that time, LoopPay was just delivering its kickstarter campaign when the South Korean giant had their eyes caught.
The investment, which was facilitated by Samsung's Global Innovation Center, helped fuel LoopPay's MST technology development.
Will Garylin, CEO of LoopPay stated that when his LoopPay got its investments from Samsung, both companies had no idea that Apple Pay was going to launch. Both companies were focusing on solving consumer adoption, which was a bigger problem to them at that time.
But after further seeing the future possibilities and analyzing the market, and Apple Pay's review, Samsung decided to acquire the technology as a whole and brought the company in-house.
"We are excited to take our relationship with LoopPay to the next level, by bringing consumers a mobile wallet solution that is not just safe and reliable, but also widely accepted at more locations than any competing service," said David Eun, EVP of Samsung's Global Innovation Center. "Through this deal we can significantly accelerate our mobile commerce efforts. LoopPay's outstanding leaders and team have deep-rooted relationships with banks, card networks and merchants that will complement those Samsung has established over the years."
Further comments came from Margaret Keane, President and CEO of Synchrony Financial: "This is great news for our customers who can access their cards and make payments using LoopPay's contactless MST technology. Our goal is to offer valuable products for our clients, service providers, and our customers. We look forward to working with LoopPay and others to deliver secure mobile payment solutions for all of our 60 million active accounts."
"LoopPay is focused on delivering a digital wallet solution that is dependable for consumers around the world, one that provides more value from card issuers and the merchants that serve them," said Will Graylin.
"We are excited to join the Samsung family to continue our goal of making smartphones trusted, secure smart wallets and unlock the limitless possibilities of mobile enabled commerce."
Changing the Existing Habits
Mobile payment is still relatively new. The biggest problem with innovative and new product/service is to make it adapt to the current changes, trends and demands, as well as competing with existing consumers' habits.
If Apple, or Samsung, wants to win against each other, or with others in the competitions, they need to solve that fundamental problem, and make the product useful.
"Things are going to evolve quickly once the game really starts. And I think the game is going to be played in multifacets. Part of it is in the physical acceptance of a wallet. There's also the remote acceptance of a wallet, in-app, digital. And folks are already playing in that space with PayPal and Apple Pay trying to influence the in-app purchase (experience). Consumers have to be able to replace a lot of their other cards - private label cards, gift cards - to really function as a digital wallet," said Graylin.
After releasing the new product, they must keep improving, especially when dealing those merchants that have software incompatibilities. They should seek to make some changes in the software changes.
It will take some time to address those issues. But as LoopPay has already had 90 percent of the market's potential, it would be much easier for both Samsung, and the merchants, to adopt the necessary changes before making real users in using it.
When the keys for a product to be able to make successful sale are compatibility and reliability, LoopPay apparently has both. And if Samsung could bring a solid mobile payments offering before Google or a third party does, Samsung can definitely able to get that prime position by grabbing the large piece of pie in the Android market.