As Samsung announces two new flagship phablet releases, it has also finally unveiled its digital payment service, Samsung Pay. This rival to Apple Pay has been expected for some time, with the mobile payment marketplace expected to become an extremely profitable niche in the coming years. Indeed, recent estimates indicate that the mobile payment niche will be worth $800 billion by the end of the decade.
Samsung Pay launches
It’s not surprising then that the biggest consumer electronics players want a slice of this particular cake. With Samsung having announced the rollout of the Galaxy Note 5 and Galaxy S6 Edge+ devices in New York, the release of Samsung Pay alongside these two flagship handset is intended to be an assault on the mobile payment marketplace.
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Apple has achieved something of a head start, simply by ensuring that Apple Pay got to market first. Apple Pay already controls a significant percentage of the mobile payment marketplace, and there is no doubt that Samsung has its work cut out to close this initial gap. Nonetheless, the company was extremely positive, as one might expect, about the prospects of Samsung Pay, and the corporation is setting it up as a direct rival to Apple Pay from day one.
Utilizing Near Field Communication and the recently acquired LoopPay’s magnetic secure transmission technology, Samsung Pay will enable existing Galaxy users to make retail payments directly from their phones. The process is extremely similar to Apple Pay, with a simple swipe required on the screen of the device. Already it is possible to use the existing Samsung Galaxy devices to make transactions at 90 percent of retail locations in the United States, and this is a major advantage over the existing Apple Pay.
The inclusion of magnetic technology provides a significant advantage over Apple Pay, which is currently based on NFC alone. It seems that the acquisition of LoopPay back in February could turn out to be a masterstroke by Samsung in the mobile payment marketplace, as this will enable the technology to be utilized with standard credit card swipe readers. Already researchers have indicated that this could be a significant advantage for Samsung in the marketplace.
Although Apple has achieved outstanding market penetration, it cannot boast the same retail location penetration at this point in time. While Apple has a coolness that Samsung may never match, one area where Samsung Pay unquestionably has a large advantage is in the ubiquity of the Android platform. There are, of course, far more Android devices in circulation than those driven by the Apple iOS system, with the latter being exclusive to iPhones. Despite the overwhelming popularity of the flagship Apple smartphone, there is no doubt that Android will remain ahead of Apple in this statistic on an indefinite basis.
Another big plus point for Samsung in the battle with Apple Pay is that the proprietary Apple technology is yet to actually become particularly important to iPhone owners. Research indicates that the levels of Apple Pay adoption of existing iPhone 6 users have been pretty insignificant. Although the number of merchants that currently accept Apple Pay continues to expand, less than 15 percent of iPhone users have actually tried it, according to recent reports.
It could certainly be asserted that the more broad-based user base of the Android operating system will enable Samsung to gain greater traction with Samsung Pay. But Samsung will also face its own challenges. When questioned about the reasons for not using Apple Pay, users of the existing Apple technology indicated that it was almost without exception due to the fact that they are happy with their exiting payment method. Even the consumer electronics behemoths of Samsung and Apple have yet to communicate to consumers precisely why they should be utilizing this technology, and this doesn’t seem likely to change in the immediate future, regardless of optimistic prognostications regarding mobile payment income.
And this isn’t the only challenge for Samsung. Even among people who do use Apple Pay, that majority don’t actually utilize it regularly. Many Apple Pay users have stated that they had simply forgotten about the technology once the novelty had worn off, and many more have indicated that they don;y even know which stores will accept the payment system. This could be ground that Samsung can gain from Apple, due to the ubiquity of Samsung Pay, but the overall message is that the whole concept of mobile payments has work to do to convince consumers that it represents an improvement over more traditional forms of payment.
However, despite the advantages that Samsung Pay has clearly accumulated even in its extremely embryonic existence, there are disadvantages for Samsung to deal with as well. Firstly, Samsung Pay has yet to be tested in the real world. This could lead to problems when customers attempt to utilize Samsung play, with a distinct lack of testing having taken place at the time of writing.
Additionally, by Samsung’s own admission, Samsung Pay is slightly more complex to utilize than Apple Pay. This doesn’t exactly bode well considering that consumers have probably seen little advantage in using Apple Pay over existing payment methods. But it may be impossible for Samsung to match the existing streamlined setup process that Apple has put in place, and there are also issues related to fingerprint security.
Apple Pay automatically launches when devices are located near to an NFC terminal, even if the phone is sleeping, whereas Samsung Pay requires you to choose a card, scan your print, and finally tab in order to pay. This longer process is unlikely to appeal to consumers, and once again underlines the ability of Apple to implement user-friendly technology that makes sense in mass market devices.
There are reasons to believe that Samsung Pay could establish itself as a major success story, and also obstacles to a desirable outcome for the Korean Corporation. What is certain is that we are about to see the mobile payment marketplace, long anticipated to be a major technology niche, become a major battleground between the two biggest players in consumer electronics.