With today’s announcement of Samsung Pay set to launch in the U.S. on Sept. 28, the days of the physical — call it “analog” — wallet might be numbered.
Although only a very small portion of consumers regularly use mobile payments, Samsung Pay seems to offer some options that could make it easier to use. Like Apple Pay (launched October 2014) and Google’s Android Pay (announced this May, and set to launch with Android M), Samsung Pay allows for mobile payments through a digital device like a smartphone or smartwatch. But, unlike Apple Pay, Samsung Pay works virtually anywhere a customer can swipe a credit card — as long as users have a Samsung device.
Samsung Pay works with most credit card terminals, including magnetic stripe, field communication (NFC, meaning a user just places a device close to a reader) and EMV (Europay, MasterCard, Visa). Thus, although the number of merchants currently accepting digital wallets is minimal, this stands to broaden the options for Samsung customers.
Thomas Ko, vice president and global co-general manager of Samsung Pay, acknowledged that mobile payment still has a ways to go before achieving mainstream status. The product will roll out in South Korea on August 20, and in the U.K., Spain and China soon after. Ko declined to give a specific date for the European and Chinese launch of Samsung Pay, but said it will go to market abroad after debuting in the U.S. at the end of next month.
“It’s more about the lifestyle and the overall wallet,” Ko told WWD Thursday , noting that the notion of a mobile wallet goes far beyond just credit cards. “There are membership cards and rewards cards [too]. Samsung pay is first solving a problem of acceptance of the mobile wallet.”
He added: “Until now, other mobile payment solutions have been slow in adoption not because the technology doesn’t work, but because all those terminals need to be upgraded and it’s not moving fast enough.”
He shared some data from a beta test conducted earlier this year in South Korea. Without educating the consumers or the merchants, after two weeks, about 40 percent of a user’s transaction volume for the period came from Samsung Pay.
“When the user received the beta testing for the first time they didn’t know where to go to or whether a merchant could accept Samsung pay – and the user went out and starting using the solution,” Ko said.
He also dispelled the belief that that mobile payment is better suited for everyday use, or high frequency, low value purchases. Research showed that there was no discrimination in the types of purchases where Samsung Pay was used – low or high value transaction.
This is also a clear effort by Samsung to decouple itself from Google, as Samsung largely uses Google’s Android for the core functionality of its phones. Samsung Pay will come for free on the Galaxy S6 Edge and Note5 phones.
For retailers already using mobile wallet services, the addition of Samsung Pay should be relatively seamless. Samsung Pay, when it launches in the U.S., will work with American Express, Bank of America, MasterCard, AT&T, Sprint, T-Mobile, U.S. Bank, U.S. Cellular and Visa.
Although the options for mobile payments are increasingly diverse, adoption by customers has proven to be less immediate. According to Mark Willis, head of technology and innovation at consultancy firm Stored Value Solutions, about 2 percent of Americans have used a phone to make payments (as reported in a recent WWD story). Willis said that part of the reason for the reluctance to move past credit cards are their security and ease of use. Samsung Pay requires a device with a fingerprint sensor, and does not store or share payment information.
Time will tell how quickly (or if) consumers abandon traditional credit cards, but as smartwatches become more familiar to consumers, perhaps mobile payments will as well.