Samsung is in discussions over a possible deal with payments start-up LoopPay that might see the smartphone maker launch its own mobile payments system to challenge Apple Pay in 2015.
Samasung’s new smartphone is due for release in early 2015, and the negotiations with LoopPay may mean that those with newer Samsung models will be able to pay for goods in-store using their phones rather than card or cash.
A source told Re/code that the deal has not yet been finalised, and could still fall apart. But a prototype of the payments system on a Samsung phone has been created.
Neither Samsung nor LoopPay would comment on the potential deal, but LoopPay CEO Will Graylin told the site last month that his company was planning to embed its technology into a mainstream smartphone in 2015.
LoopPay’s technology wirelessly transmits the same information as that stored in a debit or credit card’s mag stripe to a store’s point-of-sale without the need to swipe a card. At the moment the company has embedded the solution, which it calls magnetic secure transmission, into hardware products such as a fob and a digital payment card which can be secured to a LoopPay smartphone case or used on its own. The user must tap any of these products at the store’s point-of-sale.
Right now, since the technology mimics a card, the solution works at more stores than Apple Pay. But US retailers are upgrading their equipment to accept chip and pin cards, and the upgraded hardware will accept NFC. Graylin told Re/code last month that a mobile solution in association with LoopPay and an unspecified smartphone maker would also allow an NFC payment option.
Graylin also added that his company was in talks with investor Visa to find a more secure way to transmit payment data, and was hoping to implement tokenization in its new solution.
Apple Pay uses tokenization to transmit payment data from the iPhone 5s, 6 or 6+ to the merchant’s point of sale, replacing the shopper’s card information itself with a unique token. A bank or card network later matches the token with a specific card, meaning that the shopper’s data is never sent or kept by the merchant.
The move by Samsung to get into the payments game is an obvious attempt to keep up with Apple. The smartphone maker’s latest phone includes fingerprint identification, which will likely be implemented into the new payments system to mirror Apple Pay.
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