Samsung may be looking to challenge Apple with its own feature for paying for items on the go via a smartphones.
The Korean-based company has been chatting with a payments startup firm called LoopPay, which offers its own mobile wallet system, Recode reported on Tuesday, citing multiple sources. LoopPay's current system can send information stored on a credit or debit card to a retailer's existing credit card reader using a fob, a digital payments card or a charge case that envelopes your smartphone. People can use any of the three devices to tap a merchant's credit card reader in order to pay for an item without having to swipe a card.
The idea would be to embed LoopPay's technology into a Samsung smartphone so that users could pay for items via either near-field communications or LoopPay's own magnetic stripe-compatible technology. LoopPay CEO Will Graylin told Recode earlier this month that the technology would be embedded into a mainstream smartphone next year that would have "massive penetration." However, the CEO declined to reveal the name of the smartphone or the smartphone maker.
So far, nothing is certain, according to Recode. One source said that a prototype of the technology on a Samsung phone has been developed. But another source said a deal between Samsung and LoopPay could fall apart.
Samsung declined to comment.
Assuming the technology does find its way to a Samsung phone, that could spell competition for Apple's own mobile payments system.
To allow you to pay for physical items at merchants, Apple Pay uses NFC technology built into the iPhone 6 and iPhone 6 Plus. As such, a retailer's payments terminal also needs to support NFC to conduct the transaction with your phone. More merchants have been upgrading their systems to support NFC, but LoopPay's technology can tap on a standard credit card reader without requiring NFC. Bottom Line: A LoopPay-embedded Samsung smartphone would currently work at many more retailers than would an NFC-enabled iPhone.
Like the latest iPhones, Samsung's Galaxy S4 and Galaxy Note 4 smartphones include a fingerprint sensor that could serve as the security measure needed to initiate a payment. As a further nod toward security, LoopPays wants to use tokenization, which substitutes the actual credit card number stored on your phone with a special token so your credit card information is not sent to the merchant. Apple Pay uses virtually the same type of security system.
Samsung has already dipped its toes into the mobile payments area with its. The Samsung Wallet is similar to Apple's Passbook app in that it simply lets you store coupons, tickets and boarding passes. Samsung also offers a feature whereby you can via a single click without the need for a credit card.
Samsung and Apple have had a long-standing rivalry in the mobile world with each company trying to outdo the other in technology and market share. With Apple Pay now striving to expand its reach, it's not difficult to envision Samsung aiming to cut into the same market.