SAMSUNG ELECT LTD(F)(SSNLF) Acquires LoopPay to Compete against Apple Inc. (AAPL) Apple Pay

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SAMSUNG ELECT LTD(F)(OTCMKTS:SSNLF) has been under pressure for quite some time. The company has been steadily losing its market share in the smartphone segment. The gap between Samsung and Apple Inc. (NASDAQ:AAPL) has become negligible after iPhone sales broke all records during the holiday season driven December quarter. Apple’s iPhone 6 and 6Plus have a number of features like Apple Pay, which Samsung did not have.

On top of it, Apple Inc. (NASDAQ:AAPL)’s Apple Pay has been widely used during the holiday season sales. Therefore, it was quite natural for Samsung to want to offer a similar kind of feature in its smartphones to stay in the smartphone segment. Apple’s iOS share was also increasing at the expense of Android, which Samsung uses.

Acquires LoopPay

It has been in the air for more than two months that Samsung was planning to take on Apple Pay. As part of its efforts, the South Korean company has bought LoopPay, a mobile payments startup, to enhance its efforts in the field. Samsung commenced its negotiations with LoopPay in December to merge the magnetic payment technology of LoopPay into next generation Galaxy devices. The partnership later translated into an acquisition.

Buying LoopPay will provide Samsung with ready-made competition to Apple Inc. (NASDAQ:AAPL)’s Apple Pay though it might not be on equal footing. Apple Pay was based on special ‘behind-the-scenes’ technology. The system also works directly with networks of credit card payment banks. However, LoopPay imitates a regular credit card swipe system.

EMV Technology

This could be a big headache for Samsung since America was set to follow other nations in avoiding swiped card transactions for EMV technology. The regular EMV standard depends on a small chip fixed in the card to provide authorization of the transactions, instead of reading data from the magnetic strip.

However, there appears to be an advantage too. For instance, LoopPay was compatible with different types of credit cards, as well as merchants. In comparison, the NFC-based Apple Inc. (NASDAQ:AAPL)’s Apple Pay needs the integration of time-consuming technology for participating banks to upgrade payment terminals.

On the other hand, LoopPay is currently compatible with a far wider array of credit cards and merchants than NFC-based Apple Pay, which requires time-consuming technological integration for participating banks and upgraded payment terminals in merchant locations. This might provide some cushioning to Samsung as it would work towards adding EMV functionality.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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