Samsung Pay, which has reached the one-year mark in its operations and almost 100 million transactions, has taken on competitors including traditional credit card companies and other mobile payment vendors, such as Apple Pay, Walmart Pay, Android Pay and others.
Samsung Pay, which debuted in the United States in September 2015, is now used in seven countries around the world after beginning its service in Korea, according to an Aug. 23 announcement by the company. The mobile payments service, which includes Samsung’s Knox security features, only works on specific Samsung Galaxy mobile devices, including the latest Note7, Galaxy S7 and S7 Edge, the S6 Edge+, the Note5 and 2016 models of the Galaxy A5, A7 and A9 smartphones.
The service is an electronic wallet that allows users to pay for purchases in a growing number of stores by using the Samsung Pay app on their compatible phones. Samsung Pay works through its acceptance of multiple payment systems, from Near Field Communication (NFC) to traditional credit card readers and swiping terminals.
Several IT analysts told eWEEK that the one-year anniversary of Samsung’s mobile payment service shows that the program is succeeding for the company.
“Mobile payment is seeing high growth, primarily being driven by online mobile shopping,” which accounts for about 90 percent of the total transaction value of mobile payments so far, Sandy Shen, an analyst with Gartner, said in an email reply to an eWEEK inquiry. NFC payments so far only make up about 4 percent of the total transactions today, she said.
So far, Samsung Pay holds only a small part of the overall $650 billion in total mobile payments being made around the world now, but it is making inroads, she wrote. “But I need to give them credit for reaching a milestone while being around for only one year,” she added.
Charles King, principal analyst with Pund-IT, said part of Samsung’s success so far has been that it began its payment services in its home country of Korea, which “is one of the world’s most technologically savvy countries.”
Samsung didn’t announce how much of its Samsung Pay business is begin done in the United States, which King said leads him to believe it is “minuscule” compared to the Korean marketplace. “The success of Samsung Pay in Korea is analogous to rooting for the home team. The company is doing well there, and is using that to tout and organically grow its payment system in other markets.”
In contrast, Apple “is pursuing larger goals [with Apple Pay] but that means its global Pay efforts and successes risk being more diluted and diffuse,” wrote King. “Of the two approaches, Samsung’s is more immediately beneficial and sustainable for the company.”
Mobile payment users will certainly have a big say in the marketplace, wrote King. “There seems to be a definite generational tilt in mobile pay with younger users far outnumbering older users. That should benefit mobile pay vendors, at least the ones that are still around in a decade or two.”
Rob Enderle, principal of Enderle Group, told eWEEK that he sees Samsung Pay being “far more compatible with existing credit card readers [than Apple Pay], though that does lower the security of the result and the magnetic strip solution has had issues.”
Users have been seeing a growing number of competitors in the marketplace, he wrote, but what users want is a secure device-independent system, regardless of brand, said Enderle. “Google is closer but they have the attention span of a 4-year-old on sugar, which is why Apple and Samsung get far more attention.”
One shortcoming so far is that there is no successful cross-platform service yet in the mobile payments market, he said. “Apple Pay and Samsung Pay appear to be the most successful, which is largely why the vast majority of us are still not regularly using anything other than traditional credit cards. Both Apple and Samsung have sunk a lot into their respective programs and been surprisingly successful as a result.”
Mark Hung, another Gartner analyst, said his impression so far of Samsung Pay is that it has “definitely exceeded my expectations” a year after its birth. “When Samsung first announced this, I did not think they would get much traction with it. Outside Apple, I did not think a handset approach would work. If any handset maker would have a dominant mobile payment platform, I thought the only dominant maker would be Apple. But a year hence, not that Samsung Pay has been on fire, but it definitely got traction.”
In December, another 19 bank card issuers began accepting Samsung Pay, according to an earlier eWEEK story. Adding the services were credit and debit card issuers including PNC Bank, KeyBank, California Bank and Trust and Pentagon Federal Credit Union. The other new Visa credit card issuers joining Samsung Pay are TCF Bank, Central Florida Educators Federal Credit Union, Financial Center Federal Credit Union, Greater Kinston Federal Credit Union, Keypoint Credit Union, Numerica Credit Union, Utah Community Credit Union and Amegy Bank National Association.