Samsung is in talks to release a mobile payments system to rival Apple Pay in 2015
Tech magazine Re/code reports that discussions are ongoing between Samsung Electronics Co. Ltd. (LON:BC94) (KRX:0059935) executives and Burlington, Massachusetts-based startup LoopPay concerning the system, which would enable Samsung owners to pay for goods by passing their smartphone over a checkout device rather than using cash.
The report cites multiple sources, one of which claims that a deal is far from being reached. Another source says that LoopPay has created a prototype of the system which has been installed on a Samsung phone.
Neither a Samsung spokesman nor LoopPay CEO Will Graylin were willing to comment on the talks.
Samsung’s battle in the war with Apple
Samsung looks to be following in the footsteps of fierce rival Apple Inc. (NASDAQ:AAPL), whose Apple Pay system launched this September. Users must authenticate their purchase by pressing their finger against a fingerprint identification sensor. The latest incarnation of the Samsung Galaxy smartphone also includes fingerprint identification technology which could be used for a similar purpose.
The advantage of the LoopPay technology is that it wirelessly transmits the same information which is transferred upon swiping a credit card. This information can be received through existing payment equipment, so stores do not need to upgrade their equipment as they do in order to accept payments from Apple Pay or Google Wallet. Earlier this year Re/code’s Walt Mossberg reviewed LoopPay, and he reported that his payment was accepted at 10 of the 13 stores he visited.
CEO Graylin previously claimed that LoopPay technology would be embedded into a smartphone in 2015, but did not name the manufacturer. The company has also upgraded its products to enable payment transmission via NFC technology.
Many stores are updating payment equipment in order to eventually phase out swipe payments in favor of NFC technology, a chip-and-pin system which offers better security. LoopPay is also exploring ways to improve its security, with help from Visa, which is an investor in the company.
One potential system is called tokenization, which replaces a user’s card information with a placeholder that is later matched to a bank account. Apple Pay already uses tokenization to ensure security, which means that the store never receives the real account information.