Business

Samsung acquires mobile payment system LoopPay

Samsung Electronics Inc. has acquired LoopPay Inc. in Burlington, the maker of a “digital wallet” that lets people make purchases at retail stores with a smartphone instead of a credit card. Financial details of the transaction were not revealed.

The deal gives South Korea-based Samsung, the leading manufacturer of Android smartphones, a new weapon in its showdown with the American smartphone giant Apple Inc. But one industry analyst questioned whether LoopPay’s technology, which works with today’s aging credit-card terminals, will remain relevant for more than a few years.

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“It does seem as though Samsung is buying a company that supports a technology that’s on the way out,” said James Wester, the research director for global payments at IDC Corp. in Dallas.

Both Samsung and Apple make phones that contain “near-field communication” chips, which let a user make credit card purchases by tapping the phone against a payment terminal. Apple’s version of the technology, Apple Pay, was launched last year. But nearly all retailers still use card readers that capture data from the magnetic strip on the back of a credit card. As a result, only a few hundred thousand of the nation’s 3.8 million retail stores can accept Apple Pay or other NFC-based payment services.

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LoopPay offers a system that is compatible with existing credit-card readers. Designed as a case for the newer Apple iPhones, it contains a radio that transmits the credit-card data directly to standard payment terminals.

LoopPay’s chief executive, Will Graylin, said the system works with 90 percent of card readers, allowing consumers to make phone-based payments almost anywhere.

Americans are switching to credit cards with embedded data chips, which are already commonplace in much of the world. In addition, most readers for these new cards also will work with NFC systems like Apple Pay. While the transition will take years, Wester said, he warned that it will eventually make LoopPay unnecessary.

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“What Samsung is really trying to do here is a bit of a question mark for me,” he said.

“I don’t know if they just decided to use it as a stopgap until NFC terminals are more available.”

Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.
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