Saturday, March 7, 2015

With ready access to 30 million merchants, Will Samsung Pay surpass Apple Pay in Global adoption?

Samsung unveiled their new Galaxy S6 and Galaxy S6 Edge this week on March 1, and the most exciting news concerning these new devices is the fact that they will be the first to feature Samsung’s new mobile tap-to-pay feature, appropriately called Samsung Pay, which is positioned to surpass Apple Pay in terms of transactions conducted across the globe.

Much like its competitor Google  (which launched the Google Wallet in September 2011) and Apple (which launched Apple Pay in October 2014), Samsung is targeting to be a major player in the "in store" mobile payments with Samsung Pay. Mobile payments aren’t a new concept, but the support from handsets in terms embedded requisite technologies such as NFC has only been realized in past 12 months. With a major company like Apple pushing in-store Mobile Payments, it appears that the time has finally come for these technologies to move to the forefront. In fact, Samsung could very well gain from the momentum that Apple and others have created to move Mobile Payments move from R&D settings to real world.

Samsung’s acquisition of LoopPay in February was a significant strategic move for the company that could help launch them to the forefront of Mobile Payments. Like Apple Pay and Google Wallet, Samsung Pay can utilize NFC technology  that works with compatible cash registers, However, in addition, Samsung Pay also has LoopPay technology  with the Magnetic Secure Transmission (MST) feature. This feature will allow Samsung users to hold their phone up to a traditional card swipe reader to pay for their transaction. Because MST does not require the retailers or merchants to upgrade they Point-of-Sale terminals, it results in nearly universal access to credit card readers for MST equipped Samsung phones, unlike the other mobile pay technologies which rely on NFC technology only.

Samsung estimates that their system has a potential to be accepted by 30 million global merchants, or what totals to 90% of all retail locations, in comparison to the mere 200,000 acceptance points for Apple Pay and 300,000 MasterCard PayPass locations for Google Wallet. This will give Samsung a major advantage over Apple Pay when they launch the system in June, and will further push back Google Wallet and PayPal in the mobile pay market. Samsung has gained commitments from Visa and Mastercard, American Express, Bank of America, and JP Morgan Chase, which add to the insurance of their staying power. In addition, the company is focused on security, and makes it clear that Samsung will not keep any personal account numbers on the device itself. They will adopt fingerprint technology, similar to the Apple Pay system, which requires the device owner to hold down their finger at the time of payment tap.

While more and more retailers roll out NFC chip readers, the playing field could still be evened out, but for the time being Samsung is positioned to be well ahead of the game. Samsung Pay may very well be a defining feature that draws more mobile customers over to Samsung when it rolls out this summer in the US and Korea.

While there is much talk about how Samsung Pay will topple Apple Pay, but it will also push back PayPal Mobile and Google Wallet. PayPal’s system only works with merchants who have a PayPal reader

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