Samsung buys LoopPay, signals move toward mobile payments service

Samsung Electronics has bought LoopPay, a US-based mobile wallet startup, signalling its intention to launch a smartphone payments service to compete with rival Apple's recent offering in the form of Apple Pay .

Mobile payments have been slow to catch on in the United States and elsewhere, despite strong backing. Apple, Google, and eBay's PayPal have all launched services to allow users to pay in stores via smartphones.

The weak uptake is partly because many retailers have been reluctant to adopt the hardware and software infrastructure required for these new mobile payment options to work. These services also fail to offer much more convenience than simply swiping a credit card, Samsung executives said on Wednesday.

LoopPay's technology differs because it works off existing magnetic-stripe card readers at checkout, changing them into contactless receivers, they said. About 90 per cent of checkout counters already support magnetic swiping.

"If you can't solve the problem of merchant acceptance... Of being able to use the vast majority of your cards, then it can't really be your wallet," said David Eun, head of Samsung's Global Innovation Center.

Injong Rhee, who is leading Samsung's yet-to-be-announced payments project, said the South Korean tech major will soon reveal more details of its envisioned service. He would not be drawn on speculation the company may do so during the Mobile World Congress in Barcelona.

Rhee said new phones such as the upcoming, latest Galaxy would support the service.

Rhee said in an interview that the company intends to roll out accompanying services that go beyond merely turning the smartphone into a wallet, such as by allowing users access to information such as spending.

"It's about changing user behaviour, it's not about who's first in the market," the executive said.

Apple Pay, launched in September, allows iPhone users to pay at the tap of a button. Executives have lauded its rapid rollout so far, including the fact that more than 2,000 banks now support it and the US government will accept Apple Pay later in 2015.

Apple Pay, however, requires retailers to install near-field communication and some have been reluctant. In addition, many retailers such as Wal-Mart Stores Inc and CVS Health Corp, back their own system, CurrentC.

Samsung had invested in LoopPay, along with Visa and Synchrony Financial, before its acquisition. Terms of the deal, which Samsung negotiated over several months, were not disclosed on Wednesday.

It is unclear how else Samsung could differentiate its service versus Apple's or other rivals.

(Reuters)