Mobile wallet war about to heat up

Wherever Apple goes, you can bet that Samsung isn’t too far behind. After talk it was getting left behind in the mobile wallet wars, the Korean smartphone maker may well have pulled off its most important acquisition to date. Enter LoopPay. The startup solves a fundamental problem in the tech space – something that even Apple Pay has to deal with:  offering a groundbreaking function that doesn’t have to wait for hardware to catch up. Loop Pay essentially replicates the existing magnetic strip card readers used by credit cards, still ubiquitous in the US. It produces its own magnetic field by electrical currents, and like the Apple NFC format, only works over short distances.

What that means is it can be used at about 90% of all card payment terminals currently in use. That’s about 10 million merchants, LoopPay says. In contrast Apple Pay has about 5% reach.  

"We solved a very tough problem, which was, ‘How do you get the phone to talk with the existing point of sale without having to change the point of sales out there?’" said co-founder and CEO Will Graylin.

This is a big deal in the US. The planned nationwide roll out to more secure EMV (Europa, Mastercard and Visa) complaint card processing is a huge undertaking with about 1 billion cards in circulation. The October 2015 deadline is drawing near and it is expected to be at least 2017 before the transition is completed.

Both banks and merchants have been pushing back, citing costs, lack of customer awareness and technical issues. This is also the case for the airline industry which has very specific compliancy issues for in-flight point odf sale hardware. Apple Pay has recently snagged its first airline contract with JetBlue, but a LoopPay-Samsung option could be a an attractive cost-negative alternative.

The success or otherwise of LoopPay could well boil down to timing. Samsung releases its Galaxy S6 handset soon and it remains to be seen how Samsung will integrate Loop Pay’s hardware into the handset. If it can do this in a seamless, one tap way, such as fingerprint scan, then there well could be a seismic shift in m-commerce.

Will Graylin added: "We’re adding biometric as well. What you will see in the next version is that we have added a fingerprint-sensor for convenience and security. We’ve also been working with major payments players like Visa and big issuers to extend those same tokenization capabilities on to the LoopPay platform."

It will be interesting to see if that next version is ready to go when Samsung unveils the Galaxy S6 next month.