May 15, 2015
Samsung (particularly its payment division) had acquired LoopPay earlier this year but there was no announcement around how much it paid for the acquisition. Now Re/code has reported that the figure is $250 million. Will Graylin (CEO of erstwhile LoopPay) and a Samsung spokesperson both declined to comment on the revelation when Re/code reached out to them.
Samsung acquired LoopPay in February this year. LoopPay is an acclaimed mobile wallet solutions provider that turns existing magnetic stripe readers into secure, contactless receivers with the actual magic on the device side. LoopPay’s technology (MST in the devices) has the potential to work in approximately 90% or more of existing point-of-sale (POS) terminals, with no investment in new infrastructure required by merchants. Samsung will use MST tech as a weapon in the ongoing wallet wars when it launches in the US later this year.
Samsung Pay was announced on March 1st at the Mobile World Congress. Samsung Pay has NFC as well as MST (magnetic stripe transmission) portion, the technology for which has been incorporated through the LoopPay acquisition. Samsung wants to compete fiercely against other mobile payment systems by Google and Apple.
LoopPay’s talent and technology, paired with Samsung’s world leading mobile technology, global presence, and distribution capabilities will help drive the next wave of innovation in the digital smart wallet. A cornerstone of Samsung Pay would be the Magnetic Secure Transmission (MST) technology.
Samsung already had an existing relationship with LoopPay, having first identified the potential for the pioneering technology when it became a strategic investor along with Visa and Synchrony Financial. The investment, which was facilitated by Samsung’s Global Innovation Center.
Post LoopPay acquisition, Samsung wants to expand its mobile payment system to global markets. Samsung is aware that most of the POS terminals throughout the world still make use of the magstripe technology. Hence Samsung is relying heavily on LoopPay’s technology. Moreover being a global smartphone giant, Samsung wants to leverage its influence in the market to establish itself as a mobile payments giant.