Samsung Pay

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.

Tech Giant´s and Mobile Payment

Samsung Pay, Android Pay

After few years of rumors the mobile payment market seems to get finally in a very decisive phase. Apple has been the first of those three companies, which introduced a mobile payment system called Apple Pay. Since the Apple Keynote in September 2014 it just took a few months until also Samsung and Google announced at the Mobile World Congress this year that they will launch their own payment systems. Even if the Google solution, called Android Pay will be just an Application Programming Interface to support all Android payment applications to add In-App or In-Store payment functionalities. Nevertheless Google has already designed a Graphical User Interface called Google Wallet and improved it steadily since the first launch in 2011. Samsung instead unveiled a similar solution to Apple Pay even if it just supports In-Store mobile payments with NFC and also MST. The mobile payment market seems to be divided into three big pieces. Apple will cover approximately 17% of the IOS market and Samsung and Google will battle for the Android market share with approximately 78%. But what does it mean for other marketers like Financial Institutions, Mobile Network Operators or Retailers?

These players of course still try to place their own independent solutions in the market to not lose a strategic market to one of those three market giants. In general we can see a trend that nobody can deny; tech giants like Apple and Google continuously try to enter completely new markets to inherit a strategic role in a hyperconnected world in which devices can communicate with each other and all kind of smart devices getting more and more important.

One fact to argue against the tech giants is that nearly every consumer nowadays prefers Financial Institutions, Payment Schemes, Mobile Network Operators, and Payment solution provider over Handset manufacturers and Google. But which applications would you use if Passbook, Samsung Pay and Google Wallet are pre-installed on your device, accepted at nearly every store you shop, and if you have several payment cards from different issuers which you can simply add to your payment application?

I would definitely prefer a payment system which is able to add & manage all payment cards I use and which is additionally connected to different retail applications and of course which is simply and secure at the same time. And if also all my issuing banks and payment schemes are participating in a payment system of Apple or Google I would assume that these systems ensure a secure transaction for any kind of mobile payments.

Of course most of the people nowadays still pay with cash and payment cards and plastic will not disappear overnight but the trend is also showing a huge increase in online and mobile transactions, whether In-App payments or online payments the mobile channel is gaining more and more popularity.

Another benefit of Apple and also Samsung is the simple utilization of their systems. Normally adding a new card is extremely easy and don´t take much time and you don’t need many steps to activate the payment process. Furthermore you are also able to simply make online payments and In-App payments with these payment systems. So far those solutions sound like the perfect trial to perform mobile payment transactions at a POS and in addition to that also on the mobile channel.

But will those systems also expand as we expect? Right now only the US market seems to be the best starting point for a market entry, although also other countries will follow in the next month. Tech giants also have to consider legal aspects, payment infrastructures, and have to distinguish between different consumer behaviors which vary from region to region. It definitely will take time until the whole globe is ready to pay without cash and physical cards.

 

Conclusion

Most activities we can see nowadays in the mobile payment industry have been initiated by Apple, Google and payment schemes whether it’s Apple Pay and its clear statement to use NFC and an embedded secure element, Google´s HCE which has been introduced to allow software based payment systems or Tokenization introduced by payment schemes which is a method that replaces the Primary Account Number (PAN) by a token to ensure a secure data transfer of your payment card information. With these statements they always set a clear direction which technology to use.

We can see indeed a huge competition between those three giants but they have one thing in common, they want to create the next level of service for their users and therefore they continuously try to expand their portfolio and enter new markets. This strategy makes it difficult for companies which operated in the payment industry for ages. With Android Pay as a payment platform for In-App and In-Store payments, Google wants to make mobile payment available for everyone who wants to integrate it into their Android solutions. With their power and feigned openness Apple and Google let nearly everyone participate in their systems. But if you pay with your smartphone you always have to keep in mind you will pay with Google or Apple and not with brands you have used to pay in the past….