The Mobile World Congress in Barcelona this year has been a week full of announcements regarding mobile payment solutions of two major tech giants. As expected Samsung and Google announced the counterpart of Apple´s Mobile Payment solution Apple Pay.
Samsung Pay
Samsung Pay acts and looks like Apple Pay but we also can see major differences.
First of all Samsung Pay is only available for the latest Samsung smartphones, Galaxy S6 and Edge. Apple Pay instead is only available on the iPhone 6 and the iPhone 6 Plus.
One huge difference is also that Samsung is not charging any fees for a mobile payment transaction, Apple instead gets 0, 15% per transaction.
Technology & Security
From a technology perspective Samsung is also using an embedded secure element, which will be delivered by Oberthur a French mobile security specialist.
The secure element will be used to securely store your payment card information and your one time tokens on your mobile device. In addition to that the certified tokenization technology which will be provisioned by major schemes like Master Card, Visa and American Express should guarantee a secure payment transaction at the Point of Sale.
Both solutions also use fingerprint scanning as an authentication factor at the Point of Sale to ensure the authenticity of the customer.
One of the major differences between those two systems is the transmission standard. In contrast to Apple (NFC), Samsung is also using Barcode and another technology called Magnetic Secure Transmission (MST).
Through the acquisition of Loop Pay a mobile payment solution provider, Samsung is able to process a payment transaction at the Point of Sale without a NFC enabled terminal.
So what is MST? MST technology generates changing magnetic fields over a very short period of time. This is accomplished by putting alternating current through an inductive loop, which can then be received by the magnetic read head of the credit card reader. The signal received from the device emulates the same magnetic field change as a mag stripe card when swiped across the same read head. Loop Pay´s technology works within a 3-inch distance from the read head. The field dissipates rapidly beyond that point, and only exists during a transmission initiated by the user.
MST seems to be a good alternative for NFC but as most of the Financial Institutions and Payment Schemes globally are migrating from Magstripe to contactless EMV chip cards MST could become a great USP for Samsung at the short-term, whereas NFC contactless transaction could be a long-term solution for mobile payments as more and more terminals are going to be contactless. But right now MST is a great alternative for the US market entry as a lot of POS terminals in the United States are still not contactless.
User Experience
Both solutions fulfill two main criteria’s of being fast and easy at the same time.
It seems that you first have to activate your Galaxy S6/Edge, choose your preferred payment card, and finally authenticate by using the fingerprint sensor to activate your mobile payment functionality. With Apple Pay, you tap your phone at the POS terminal and scan your finger, even if the phone is locked.
As Apple Pay, Samsung Pay will be pre-installed on Samsung Galaxy S6 handsets so everyone can use this new feature immediately.
Roll out process
You can simply add a new card of participating banks by simply scanning the card with your handset camera and simply adding some additional payment card information. Samsung is not having a system like iTunes in which much of the payment card information of Apple customers are already stored.
In addition to that Samsung Pay will be rolled out this summer in the US and South Korea but further expansions are planned.
In-App Payments
Unlike Apple, Samsung is not supporting In-App purchases right now like Apple is doing. Integrating this feature into their systems Apple is having a great USP and a huge advantage over other players.
Conclusion:
With over 20% market share Samsung has got a huge potential customer base for their mobile payment solution. Until now it is not guaranteed that this solution will be the only solution Samsung clients will use to pay with their smartphones, we also can see further movement in the Android market beside Samsung, also Financial Institutions, and especially Google is catching up to place their on solution in the market or to improve existing services, at which we will take a closer look in the next article.
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