At this years Mobile World Congress event - Samsung revealed its plans to enter the mobile payments market. Last month we learnt of Samsung's acquisition of the US based company LoopPay. The Korean company's intentions with its newly acquired technology has now become clear. Collaborating with MasterCard, Samsung revealed its own mobile payments system simply called Samsung Pay. The new Samsung Galaxy S6 revealed alongside the announcement will allow customers to take advantage of Samsung's new system.
The Samsung Pay system will work much the same as its competitor Apple Pay. Consumers will be able to make purchases in physical stores simple using the NFC capabilities of their phones. What sets Samsung's offering apart from Apple's, is the capabilities the LoopPay acquisition allows. Samsung Pay not only operates using NFC but can also utilises MST (magnetic secure transmissions). This means the system can still be used at a payment point that does not have NFC capabilities. Instead the MST technology allows a payment to be confirmed by interacting with the magnetic strip used in card payments that are prevalent on a majority of payment points. This opens up the door to a vast array of retailers, who can adopt Samsung's proposition without the need to upgrade their in-store equipment. Samsung Pay recognizes on the fly what kind of interaction is possible and either completes a payment using NFC or MST.
Google, Apple and MCX have all showed that launching a new mobile payment technology is by no means an easy task. Samsung will hope that it can build on the momentum Apple Pay has generated, and surpass it due to the greater flexibility its solution offers. However, as some have pointed out, Samsung's flexibility edge only really exist in the US. Magnetic strips in Europe for example have largely disappeared, with chip and pin payment points taking over. Magnetic strips might still exist in Europe, but even so, consumer habits have moved on. As such, Samsung Pay will initially only roll out in the US and Korea starting this summer.
Both Android and iOS devices are slowly growing their mobile payments capabilities, with pre-installed systems becoming the standard. And from a user experience perspective their is little to chose between the emerging systems. Both Apple Pay and Samsung Pay allow for in-store payments authenticated using fingerprint scanning technology. Neither have baked in loyalty solutions and neither can be used anywhere other than in-store. They are objectively quite similar. It seems unlikely to me that a consumer would choose a Samsung devices over an iOS product based purely on its mobile payment technology or vice versa. Perhaps the mobile payments battle will fast become indistinguishable to the over arching hardware battle or maybe solutions that do more than just payments and are platform agnostic have the best chance of dominating the market.
By Matthew Taylor
4th March 2015