Samsung's Mobile Payment System Could Work Very Differently From Apple Pay

Samsung is expected to take several moves out of the Apple playbook with its upcoming device launch, such as implementing a quick pay system on the upcoming Galaxy S6. This move is looking more likely as the Korean manufacturer announced Wednesday that is has purchased the U.S. mobile wallet startup LoopPay.

Samsung has been in talks with LoopPay and other institutions such as Visa Inc. and Synchrony Financial for months, having invested in all three companies, according to Reuters. Rumors have in turn circulated for months that Samsung has been planning a mobile payment system to rival Apple Pay, which may be called Samsung Pay. However, name may be the only similarities between a LoopPay-based technology on a Samsung smartphone and the near filed communication-based technology on an Apple smartphone.

LoopPay's technology is works in conjunction with the magnetic-stripe card readers already at checkout counters, so it works more like a credit card than Apple Pay or other NFC-based mobile payment technologies. These systems require especial NFC readers in order to function. Apple Pay is available in over 220,000 locations in the U.S. as of last month, but the system still has not reached mass adoption considering there are at least 12 million checkout points across the country, the Wall Street Journal noted.

Some retailers have also not been quite receptive to Apple Pay, favoring other mobile payment systems over NFC-based payment systems. Many chains including Walmart, Target, CVS and Rite Aid have turned off their NFC readers to prevent use of Apple Pay and similar systems like Google Wallet in their stores. "If you can't solve the problem of merchant acceptance..., of being able to use the vast majority of your cards, then it can't really be your wallet," David Eun, head of Samsung's Global Innovation Center told Reuters.

Conversely, magnetic swipe readers are available at 90 percent of checkout counters across the country, meaning Loop Pay would be compatible with the majority of checkout counters in the U.S.

However, easy compatibility doesn’t mean than a LoopPay based system on Samsung devices would be well received, eMarketer analyst Bryan Yeager told the WSJ that LoopPay could still be bested by NFC based systems if they begin to catch on. Christophe Uzureau, a vice president of research at Gartner told the publication that Samsung would need to have the “the muscle and the commitment” to cultivate the right relationships with financial institutes to push its payment system forward as a formidable alternative to Apple Pay.