According to a new report, Samsung is in talks with a start-up called LoopPay to create its own Apple Pay competitor. Apparently, the deal hasn't been finalized yet, and it could still fall apart, although Samsung seems to already have a working prototype of the payments system. Samsung's Apple Pay competitor is supposed to arrive in the first half of 2015, likely as one of the main features of the company's upcoming Galaxy S6.
LoopPay's technology can wirelessly transmit the same information a credit card holds to a store's checkout equipment without the owner having to swipe the card. LoopPay uses a technology called Magnetic Secure Transmission, which mimics card swiping and makes it automatically compatible with 90 percent of U.S. stores, including Walmart, Target, Macy's and Starbucks.
There's just one catch. To use it, you need to either have it incorporated in the phone, or use one of the company's cases or accessories that have this technology embedded in them. Earlier this year, LoopPay's CEO said that the technology will be inside a smartphone with a "massive penetration" in 2015.
Samsung's Galaxy line of devices could make LoopPay's technology more popular. However, LoopPay intends to add support for NFC as well, now that more stores are upgrading their checkout equipment to support NFC to make it compatible with Apple Pay, Google Wallet and other NFC-based payments systems.
The magnetic technology should be phased out in the future, once most stores support NFC and it isn't necessary anymore. NFC-based payment systems also have an advantage in security, as magnetic stripe cards (and therefore LoopPay's current technology) are much more susceptible to card cloning than chip-based cards.
Next year, LoopPay intends to add support for one-time use tokens as well, much like Apple Pay. Tokens are placeholders for the actual credit card information, which can only be used in a single transaction, therefore making it very hard for anyone to track who's buying what. It's a privacy feature many have lauded, and it seems other payments systems are adopting it as well.