LoopPay must become seamless to create value for Samsung.
- With the complete cessation of any attempts at the ecosystem (see here), the acquisition of unique hardware is the only way left for Samsung to differentiate.
- To this end Samsung has announced the acquisition of LoopPay which is an enabler of wireless payments with any terminal that has a mag-stripe reader.
- Loop Pay consists of a piece of hardware that wirelessly transmits the data of the card to the sensor in the card terminal that reads the magnetic stripe.
- This is the main advantage that LoopPay has over Apple Pay which requires an NFC enabled terminal.
- LoopPay will work with any terminal in the world whereas less than 10% of terminals in the US alone are NFC enabled.
- LoopPay also includes an app. to manage all of the stored cards and to ensure that the appropriate security is observed when making a transaction.
- There are two disadvantages:
- First: The user still has to sign or enter a PIN to complete the transaction making using LoopPay no less onerous than using the original card.
- Second: It requires the user to have a case on his device that turns it into a brick or he has to carry around an extra fob.
- This is why LoopPay sells itself on “leave your wallet” at home rather than as a “much easier way to pay”.
- I have suspected for a long time that the Samsung Galaxy s6 will include the LoopPay hardware integrated into the phone which will solve the second problem.
- However the first problem will be more difficult to solve.
- LoopPay expects to be able to enable tokenised transactions (like Apple Pay) this year which should solve this problem but how successful it will be remains to be seen.
- There is a simple test.
- If the user can pay for goods and services as easily with a Samsung Galaxy s6 as easily and safely as he can with Apple Pay then this will be a resounding success.
- There is no space for compromise.
- The slightest complexity, extra step or compromise and this will be a complete failure as many wireless payments solutions have already found to their cost.
- To date LoopPay has prided itself on supporting any card and a very large range of smartphones but that is now going to change.
- I suspect that users of other smartphones will be able to use LoopPay with the external piece of hardware but only Samsung devices will have it integrated.
- This will give Samsung an important differentiator if painless mobile based payments become something that users demand on their mobile phones.
- Samsung will also have the advantage of having the system work on any payment terminal in the world as long as LoopPay can solve the usability problem with tokenised transactions.
- Given the complexities involved in tokenised transactions, I don’t expect this to make a real difference on the Galaxy s6 but it could be fully ready for the s7.
- Consequently, I still see very little that is going to make users rush out and pay up for the Galaxy s6 meaning that Samsung faces another very difficult year.
- With no catalyst and difficult comparisons to H1 2014, I still prefer Microsoft, Google and even Apple for the ecosystem.
Blog Comments
Tatilsever
February 19, 2015 at 10:32 pm
> “LoopPay will work with any terminal in the world whereas less than 10% of terminals in the US alone are NFC enabled.”
Sure, but most US credit cards should become chip-and-pin based in about a year with magnetic stripe readers being phased out pretty soon afterwards. I expect most readers to get NFC in two years, but even if that does not happen, support for magnetic strips will cease and it doesn’t sound like Loopay’s backwards compatibility will amount to much in an era of chip-and-pin cards.