Samsung Mulling Mobile Pay Deal with Startup to Rival Apple Pay

Korean device maker Samsung is mulling a deal with Burlington, MA-based startup LoopPay, a mobile payment technology developer, in a move to compete with rival Apple’s (AAPL) highly-publicized Pay system.

According to a Re/code report, Samsung is negotiating with the two-year old LoopPay for technology that would enable users of its mobile devices to forego their credit cards or cash to purchase items in physical stores, instead using their phones to finalize transactions.

LoopPay said its technology works on existing versions of Samsung’s Galaxy smartphone line and Note phablet lines and other Android devices as well as Apple’s iPhones. Samsung has yet to complete a deal with LoopPay although a working prototype of the payment system is up and running on a Samsung smartphone, Re/code’s sources reported.

A deal with Samsung could deliver instant legitimacy to LoopPay, whose chief executive Will Graylin told Re/code earlier this year that his company would finalize a deal in 2015 to embed its technology in a major smartphone maker’s hardware that would deliver “massive penetration.” Graylin has yet to identify the smartphone maker to which he referred.

Neither Samsung nor LoopPay would comment on the prospect of a deal between the two companies.

LoopPay’s Magnetic Secure Transmission payment system converts in-store payment terminals that typically accept credit cards into a reader of its technology, meaning stores and restaurants don’t need special equipment to accept LoopPay payments on enabled mobile devices. Users simply tap a LoopPay enabled device on a payment terminal to complete a purchase transaction. In effect, the LoopPay technology mimics a card swipe in that it wirelessly transmits the same information contained on a credit or debit card’s magnetic stripe to the store’s payment terminal.

According to LoopPay, its technology works on a wide variety of iOS and Android devices, including the iPhone 6, 6 Plus, 5, 5s, 4, 4s, Samsung’s Galaxy 4, 5, Note 3 and 4, and phones from HTC, Huawei, LG, Motorola, Oppo, Xiaomi, ZTE and others. The developer claims its technology is available at some 10 million retail locations.