Opinion

Samsung Pay: Why the mobile payments battleground just got competitive

4 min read

18 August 2015

With the arrival of Samsung Pay to complement/battle Apple Pay – and with Android Pay bringing up the rear in a few months – going cashless just got a lot easier and ever more secure.

There’s no question that mobile represents the future of payments. The barriers to adoption are being dismantled as technology advances and it’s even possible that a cashless society beckons in the next five years, as we turn to the supercomputer in our pockets to pay for goods and services.

In principle, both Samsung Pay and Apple Pay are pretty similar in form and function. The owner of an eligible Apple or Samsung device registers their card(s) in a few simple steps onto their phone. The clever bit is the phone doesn’t store this sensitive card data in any recognisable form. Through a process called “tokenisation” the card details are replaced with a secure token, severely diminishing the risk of fraud. 

Despite the impressive technology behind both payments services, it can certainly be viewed as a barrier to adoption that both companies require the user to own one of their newer smartphone/tablet/watch devices. Especially when you consider that Android Pay, expected in the next few months in the UK, can work on any NFC-enabled Android phone. Yet this isn’t likely to be the situation for long, as more people upgrade to newer devices and the technology becomes the norm in subsequent models.

Magnetic secure transmission vs. NFC – poles apart?

The key differentiator between Samsung Pay and Apple Pay, for both businesses and customers, is that Samsung Pay doesn’t require vendors to upgrade their payments technology – as long as they take cards, Samsung users (with eligible devices) can enjoy a quicker, more secure and seamless payments experience. This is owed to their acquisition of LoopPay earlier in the year, which has enabled them to embed a technology called Magnetic Secure Transmission (MST) technology into Samsung Pay.

It essentially turns any in-store card reading device that can swipe and read a credit or debit card into a contactless terminal. This means Samsung Pay can potentially work in some 90 per cent of US retailers.

With Apple Pay relying on newer NFC terminals, many believe this gives Samsung a significant advantage in the growing battle for mobile payments dominance. However, in my opinion, this analysis is a little too superficial. For one thing, as NFC terminals come in to support the growing numbers of UK consumers preferring to use contactless cards, the magnetic terminals’ days are surely numbered. On top of this Samsung Pay has not been developed to work in-app, unlike Apple Pay (and indeed Android Pay). 

Read more on Apple Pay:

The in-app factor

This is a more significant fact than most people realise as more and more consumers use apps to pay for everyday goods and services, whether it’s an Uber taxi home, a Hungry House take-away or your usual latte at Harris + Hoole. Astonishingly, UK consumers are spending £10bn a year while commuting and the desire to purchase on the move will only grow. This means that long-term, Samsung will need to harness the mobile app spend if they want to keep up with Apple and Android.

All told, the imminent arrival of Samsung Pay is clearly another significant step in the mobile payments revolution. Businesses which are investing in reducing mobile payments’ pain points have a huge amount to gain. Especially when it’s clear that we’re edging towards a cashless society making payments via the supercomputer in our pockets.  

Dennis Jones is CEO of Judo.