The South Korean giant announced the deal on Wednesday but exact terms have yet to be disclosed. Details of Samsung's partnership with Massachusetts-based LoopPay first emerged in December following reports that the tech giant was in talks to develop a product to rival Apple Pay.
Samsung may be late to the mobile payment game, with Apple Pay operating since September, but LoopPay has one major difference: Unlike Apple Pay and Google Wallet, which rely on near-field communications (NFC), LoopPay says it is compatible with existing magnetic-stripe card readers, which form the majority of existing point-of-sale (POS) terminals, and doesn't require any additional infrastructure.
LoopPay also works alongside NFC technology, the company said, making it more flexible than its peers.
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"This acquisition gives Samsung an edge against a near field communication (NFC) based wallet, such as Apple Pay, because Samsung does not have to convince retailers to upgrade their terminals to support NFC payments as Apple has had to do with its current NFC-only strategy," said Michelle Evans, senior consumer finance analyst, at Euromonitor, in a note.
"If Samsung plans to win this mobile payments war, its future mobile wallet will be able to run off of both of these technologies [magnetic-stripe and NFC] until NFC-enabled payment terminals are widespread across all merchant types," she added.
The convenience of LoopPay should see it gain widespread acceptance among merchants, which is essential to winning the mobile payments market.