Samsung Pay: The mobile wallet winner?
On Thursday September 10, the day when Google announced it had started to roll out Android Pay to compatible devices in the U.S., payments industry executives gathered in Washington, D.C., for the ATM & Mobile Innovation Summit to discuss topics including the current mobile wallet market and its affect on the payments industry.
And, while there weren’t many new aspects about mobile wallets to discuss on the summit’s first day, someone always manages to say something at these gatherings that stirs the pot and gets people talking.
During a panel discussion about the current state of ATMs, bitcoin, and mobile wallets, ATM Industry Association (ATMIA) CEO Mike Lee unapologetically threw his support behind Samsung Pay as the mobile wallet that will “win.”
Lee’s Samsung Pay endorsement can be boiled down to a single feature that is supposed to separate it from other mobile wallet providers: magnetic secure transmission (MST) technology support on the device itself.
Samsung acquired the rights to the technology when it bought LoopPay earlier this year, and has since embedded it into Galaxy S6 and Galaxy S6 Edge smartphones. The devices still rely on NFC chips to enable users to conduct tap-and-pay transactions at contactless-enabled point-of-sale terminals. Should contactless be unavailable, MST can “communicate” with the magnetic-stripe card reader currently present on all terminals in the U.S. Samsung Pay will sense which option is available and transact accordingly.
But whether MST is really that true game changer in the industry remains to be seen.
Some industry analysts who have tested MST in the past told Mobile Payments Today at the time of Samsung’s LoopPay acquisition that they experienced some problems with the technology interacting with traditional POS devices. It didn’t always work, and consumers have demonstrated in the past that they will quickly abandon a technology if it fails to meet their standards and those of the service provider.
Additionally, Samsung’s new payment product will run into competition from the company’s own devices.
As part of Google’s deal with AT&T, T-Mobile and Verizon to acquire Softcard technology, Android Pay now will be pre-installed on Samsung and other manufacturers’ Android phones running the latest versions of the Android mobile operating system (KitKat and higher).
Mike Dudas, who cofounded Button and previously worked on the first version of Google Wallet, said at August’s Connect Mobile Innovation Summit in Chicago that Samsung Pay will encounter consumer adoption issues down the line, due to Google’s agreement with the mobile network operators.
“I just see a lot of hurdles,” Dudas said during a panel discussion about mobile wallets. “It’s a real uphill battle and the basic justification is, if they execute perfectly on this consumer service, then they have a fighting chance. But when has Samsung done that recently?”
Other hurdles remain, not just for Samsung Pay, but for proximity mobile payments in general.
Lee and other panelists noted throughout the summit’s first day that the conversation about remote mobile purchases dominates the industry at the moment.
During a panel discussion about mobile technology trends, Michelle Evans, digital consumer manager at Euromonitor International, observed that the global rise of tablet use has led to more remote purchases in what she called “couch commerce” behavior.
She also noted that social media networks in the U.S. are slowly giving their users the option to make purchases through Facebook and Twitter at the touch of a “Buy Button.”