June 7, 2015
At the Barcelona Mobile World Congress in March, 2015, the world’s biggest maker of Android phones announced that they will soon launch a phone-based payment system. Many people believe its a counter-attack to a move by its fierce rival, Apple and its mobile payment system - Apple Pay. Samsung Pay (once launched) will put the South Korean company's mobile division at par with other payment platforms, such as Google Wallet and Apple Pay, at least theoretically. Its acceptance at POS is believed to be a big deal, thanks to the acquisition of Loop Pay.
Samsung earlier said that its new payment system, Samsung Pay, would launch on Galaxy S6 and Galaxy S6 Edge during the second half of the year. The announcement was highly anticipated after Samsung purchased LoopPay. But Samsung is doing extensive amount of work before the launch. There are operational hurdles to be cleared which is taking time. So expect Samsung Pay to be launched in the last quarter.
Samsung Pay will be arriving in September or later in partnership with MasterCard and Visa on the new service. Samsung pay is also working with multiple processors and issuers. One feature that is stated to set it apart from other payment solutions is that it does not require an in-shop contactless payment solution to work. Instead, it is compatible with 90% of magnetic stripe cardreaders. In the US, NFC adoption is still significantly low, so people would prefer payments systems which can easily communicate with the traditional magnetic card.
Like Apple Pay, Samsung Pay will utilize one-time payment tokens instead of credit and debit card numbers. Tokenization is said to be more secure because it does not reveal customers’ card number, thus it minimizes chances of fraud. Moreover, Samsung Pay will also have biometric authentication techniques where a user will be able to authorize payments by holding their finger on the home button. Unlike Google Wallet, all payments are run through Google, which means that the company sees every purchase a consumer makes even though it will not be accessing any data.
After the launch of Apple Pay, proximity payments have already been gaining momentum in the US. After the launch of Samsung Pay, things will become better. More than 50% of smartphones in the US are Android-based. This will heighten the competition of Android mobile payments in the US. Google Wallet has been in the market for some time, but the user base is still very low. Similarly, Softcard, launched by three of the biggest US cellular carriers did not receive a large number of interactions. In February, Google had acquired Softcard with an intention to strengthen Google Wallet so that it is able to compete with Apple Pay and the upcoming Samsung Pay.
There is one major point that every payments system has ignored; the integration of loyalty cards, promotions and coupons in the phone payment process. Samsung Pay is planning to integrate loyalty cards and promotions into the system. The payments system that will be launched by Samsung in September is expected to be comprehensive and will be giving a tough competition to other payments systems.