Why Samsung Pay is a Force to Be Reckoned With

Samsung is entering the mobile payments space with a bang.

 

Slated to launch in the summer, Samsung Pay will add another major competitor into the mobile payments milieu, which is already accelerating as Apple Pay gains ground and Google ramps up it’s offering via Android Pay.

 

 

(CC) BY – by Janitors

 

With a nearly 30% share of the smartphone market in the U.S. – second only to Apple – and the launch of the Galaxy 6 and 6 Edge on the horizon, the entry of Samsung is likely to have a very large impact.

 

And it’s not just that Samsung is entering this space that is significant. It’s how they are doing so. Samsung Pay hasn’t even launched yet and already it is well positioned for widespread adoption – perhaps more so than its competitors. Here’s why.

MST- and NFC-based Payments

In February, Samsung acquired LoopPay and its magnetic secure transmission (MST) technology. MST essentially turns in-store payment terminals with credit card swipe functionality into contactless payment terminals, without merchants having to alter their POS infrastructure. In other words, if you can swipe a credit card, you can pay using MST.

 

Since Samsung Pay will support both MST-based payments and NFC-based payments, the technology to support it is already available on up to 90% of payment terminals in the US, without any changes to hardware or POS systems. This far surpasses the number of locations Apple Pay and Google Wallet – which support NFC but not MST – can be used at. In fact, some estimate that Samsung Pay could reach up to 30 million merchants worldwide (assuming payment providers are on board).

Easy Consumer Adoption

User adoption is always a valid concern with any new mobile payment option. If people don’t use it, it won’t be successful, plain and simple. Samsung is trying to break down barriers to user adoption by putting the technology directly into the hands of consumers.

 

 

(CC) BY – by Janitors

 

Both the Samsung Galaxy 6 and Galaxy 6 Edge will have MST technology built-in to the device, so users have the option of making NFC payments at locations that support it, or MST payments if they do not. Samsung Pay, then, already has the framework in place for ubiquity and widespread acceptance while Apple Pay and Android Pay still work to tackle the adoption dilemma.

EMV and Bank Support

Another reason we should be paying attention to Samsung Pay is it has the right institutional support already. It will work with Visa, MasterCard, America Express, and Discover, and will support EMVCo-compliant tokenization. Furthermore, Bank of America, Chase, Citi, Synchrony Financial, and U.S. Bank have already announced they will be participating in Samsung Pay. Looked at another way, this means that Samsung Pay will be supported by:

 

• The two largest issuers of private label cards
• Four of the six largest Visa/MasterCard credit cards issuers
• Three of the five largest Visa/MasterCard debit card issuers
  
  Source: Samsung Pay to Launch With NFC and MST, Nilson Report

 

The combination of these factors – MST/NFC support, putting the technology in consumer’s hands, and support from the right institutions – makes Samsung Pay a very significant player in mobile payments, even before its launch. While Apple works to get more users and merchants on board with Apple Pay and Google works to better its Android Pay solution, Samsung already has a solid framework that consumers will be able to use easily as soon as it launches.