Samsung seemed to be working on a prototype of a payment system that is highly likely to compete against Apple Pay. While the deal is still on a very early stage, the company is said to be in talks with a start-up known as "LoopPay."

LoopPay uses the so-called "magnetic secure transmission" wherein the user would tap his device near a credit card magnetic swipe terminal. At present, the technology is compatible with a number of smartphones which include Apple's iPhone.

Since it mimics the act of swiping a card, LoopPay works in more merchant locations compared to Apple Pay or Google Wallet. Earlier this year, LoopPay was reviewed by Walt Mossberg of Re/code who later reported that out of the 13 stores he visited, LoopPay's technology worked at 10.

LoopPay is said to be compatible with 90 percent of the stores in the U.S. These include Starbucks, Macy's, Target and Walmart.

Samsung has hinted in the past on plans to expand its Wallet service that will support offline payments. After all, the popularity of using smartphones for on and offline payment seemed to keep on increasing along with a number of competing apps and services that support the technology. Expanding the service and incorporating it in a smartphone would definitely allow Samsung to attract more users to its mobile devices.

"LoopPay's technology would allow people with certain Samsung phones to pay in the vast majority of brick-and-mortar stores by waving their phones instead of swiping with a credit card or cash," said Re/code.

Earlier this month, LoopPay CEO Will Graylin told Re/code that his company's technology would have "massive penetration" in 2015 when it becomes embedded into a mainstream smartphone.

The next Samsung Galaxy smartphone could just be the mainstream device that can support the technology. In fact, the payment system would most likely be one of the main features of the upcoming Galaxy 6.

Next year, LoopPay plans to add support for one-time use tokens. Otherwise known as "tokenization," the system works by substituting a shopper's card details with a unique placeholder. The token is then matched up with a certain credit card account either by a bank or card network. It is believed to be secure since the merchant never receives or keeps the details of the actual payment.

It remains to be seen whether Samsung and LoopPay could come up with a finalized plan. However, there is also a huge possibility that the plan would materialize as Samsung is currently keen on trying a number of new services which it can introduce in the next Galaxy device.

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