The
announcement of Samsung Pay, in direct competition with Apple Pay, is a
signal that payments with mobile devices are growing up. Samsung wants
to make it clear that, not only is it playing in the same space as
Apple, but it is doing it better.
Once
a year, Barcelona plays host to an event that signals the key shifts in
mobile technology, setting the agenda for personal gadgets for the rest
of the year. Mobile World Congress 2015, which took over the city for
most of last week, pushed the boundaries just a little further than
usual.
The
most significant announcement of the week was not a device, however,
but a new way of doing something as old as civilisation: making
payments.
When
Samsung unveiled its new Galaxy S6 and S6 Edge, it also declared the
next phase in its war with Apple. Back in September, Apple had announced
the iPhone 6 and 6 plus, along with a payment system called Apple Pay.
The similarity in names is no coincidence. Samsung wants to make it
clear that, not only is it playing in the same space as Apple, but it is
doing it better.
Apple
Pay works through NFC, or near-field communication, which allows the
sending of data from one device to another with a single tap. That data
can include files, photos and payment or transactional information, if
it has been set up in advance. As a result, a single tap, authenticated
via the fingerprint sensor on the iPhone 6, can conclude a transaction
at an NFC terminal in a retail outlet.
Samsung
Pay goes a step further. While it also offers fingerprint verification
and NFC, which is still in limited use in the retail world, it ups the
ante with MST, which caters for the vast majority of retailers who still
use magnetic stripe card readers.
MST,
for magnetic secure transmission, allows a device to be placed
alongside a card terminal and send a radio signal that mimics the
interaction of the magnetic stripe on a card with the terminal. It
instantly allows Samsung Pay to be compatible with any retailer in the
world that accepts credit, debit or payment cards.
Samsung’s
leapfrog over Apple was made possible by its acquisition, earlier this
year, of a company called LoopPay, which describes itself as “the
world’s first mobile wallet solution that allows consumers to pay with
their mobile devices at most places and leave their wallets at home”.
The
LoopPay solution, as it existed prior to last week’s announcement,
consisted of a LoopPay App and a LoopPay device, which worked in tandem.
“The
App manages and securely stores all payment cards including credit,
debit, loyalty, and gift cards on the device,” LoopPay explained.
“Currently, we offer the LoopPay Card, CardCase, and a stand-alone Case
for iPhone 5/5s, 6, and 6 Plus.”
The
company’s explanation of how LoopPay works provided no inkling of the
scope of Samsung Pay, as it implied any manufacturer could use it.
Samsung turned the market on its head with one simple innovation: it
built the LoopPay technology into the Galaxy S6 and S6 Edge, instead of
providing an accessory device.
The
result is that the phone merely needs the app to be activated for it to
run Samsung Pay. It also means that the accessory case for iPhones is
almost instantly obsolete.
The
service is initially being launched in Samsung’s home territory, South
Korea, and in the United States – a direct challenge to Apple. There is
no timeframe on its roll-out elsewhere, which suggests Samsung is
initially more focused on taking on Apple than on serving consumers.
That
is also, most likely, the reason for the cut-and-paste branding of the
payment service. It may be the snappiest possible title, but calling it
Samsung Pay is also the most sincerest possible form of flattering
Apple. If the wheels come off this particular bandwagon, it will be more
than a financial disaster for Samsung.
Later
this year, American retailers will be required to implement EMV
(Europay MasterCard Visa) “chip-and-pin” terminals, which may well have
to include NFC technology. That opens the rest of the US market to
Apple, but still leaves Samsung with a global edge.
In
the meantime, other challengers are likely to emerge. Rumours have
already surfaced that LG Electronics will build payment technology into
the next version of its flagship phone, to be called the LG G4. Numerous
mobile payment applications will also have to change their game or find
a way to integrate or add to the two Pay systems.
Google
Wallet, which was once expected to dominate mobile payments, is fast
fading into the background. Its near-demise is a timely lesson to the
Pay masters of the mobile world that market domination in one arena does
not automatically lead to market success in another.
Source: Balancingact-Africa
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