Samsung's big Mobile World Congress reveal taps into one of the industry's biggest trends: mobile payments services. Dubbed Samsung Pay, the electronics giant is promising to usher in a "new era of mobile payments and commerce."
Samsung Pay hopes to differentiate itself in the market by tackling what it sees as a challenge for retailers. The company's research shows mobile wallets have had "extremely low acceptance" with merchants using conventional magnetic stripe terminals. Samsung Pay technology lets consumers use their mobile devices to pay at existing point-of-sale terminals.
The U.S. mobile payments market is set to boom by 2019, according to market research firm Forrester Research Inc. Forrester is predicting it will hit $142 billion by then. Against that backdrop, JK Shin, CEO and head of IT and Mobile Communications Division at Samsung Electronics, is making some bold, Apple-like statements as the company unveils its latest mobile market advancement.
"Samsung Pay will reinvent how people pay for goods and services and transform how they use their smartphones," Shin said. "The secure and simple payment process, coupled with our robust partner network, makes Samsung Pay a truly game-changing service that will bring value to consumers and our partners in the ecosystem."
Near Universal Acceptance
Whether that's hope, hype or the honest truth remains to be seen. Here's what we do know: Samsung Pay taps into both near-field communication and a new proprietary technology called Magnetic Secure Transmission. By using both technologies, Samsung is opening up mobile payments to the most existing terminals. Samsung is basing its MST innovation off the LoopPay technology it acquired.
What's more, Samsung has partnered with MasterCard and Visa for Samsung Pay and is working overtime to make deals with many other global financial players, including American Express, Citi, JPMorgan Chase, Bank of America, and U.S. Bank. Samsung's stated goal is to provide greater flexibility, access, and choice for customers with a user-friendly and secure payment experience.
With all these deals in the works, Samsung Pay could soon be accepted by about 30 million merchant locations around the world. If the company reaches its goal -- and no one else moves faster -- that would make Samsung the first mobile payment solution with near-universal acceptance, one-upping Apple Pay and Google Wallet.
How It Works
Samsung Pay's secret sauce is the MST. The MST technology makes it possible to support private label credit cards with the cooperation of key partners, including Synchrony Financial and First Data Corporation. Indeed, what makes Samsung Pay a near-universal mobile payment solution is how it interfaces with merchants, issuing banks, and major payment networks to accept a wide range of payment cards.
Here's how it works: Samsung Pay will offer an app that lets consumers add cards. Once a card is added, the consumer just swipes up from the bezel to activate the Samsung Pay app, selects the payment card of their choice, and authenticates it with a fingerprint sensor. To make purchases, consumers just tap the device at the point-of-sale terminal.
Samsung made a big deal about privacy and security, promising to uphold the highest standards on both fronts. For example, Samsung doesn't keep personal account numbers on the consumer's device and offers a unique secure token to help prevent fraud. Samsung is also relying on its own Knox mobile security platform and ARM TrustZone for added layers of security against fraud and data attacks.
Samsung Pay will make its debut in the United States and Korea this summer and expand to other regions, including Europe and China, with the Samsung Galaxy S6 and Galaxy S6 edge.