Samsung Heats Up the Wallet Wars: Do You Need Samsung Pay on a Galaxy S6?

NEW YORK (MainStreet) — Mark your calendar for April 10. That's the day Samsung rolls out its flagship Galaxy S6, to go head-to-head with the iPhone 6 and, crucially, Samsung is upping the ante by taking on Apple Pay with its own Samsung Pay. It may even ship earlier than April 10, because many reports claim, Samsung is so eager for this fight. The question is: do you want Samsung Pay?

The question is sharply pointed, because, in many ways, this is the battle for the future of payments. And on paper - unexpectedly - Samsung will come into the fight with a commanding lead. Here’s why. In a recent presentation Apple CEO Tim Cook said Apple Pay is currently accepted by some 700,000 locations. Samsung Pay probably will be accepted at ten times that number, on launch day. That is because Apple Pay needs a terminal that accepts Near Field Communication (NFC) payments, and that capability remains rare. Samsung Pay will work on old-fashioned magnetic stripe terminals, because the company recently bought LoopPay, a fairly ingenious product that puts credit card data in an external fob that can be used to pay at mag stripe terminals, no card required.

What Samsung is doing is building that LoopPay technology into the Galaxy S6, so an external fob will not be required. And, in an instant, with a Galaxy S6 in hand, a user will be able to pay via phone at almost every place that accepts credit cards. The establishments do not even need to know they are taking a mobile payment. To them, it looks like any run of the mill magnetic card swipe.

So Samsung Pay will be taken just about everywhere. Apple Pay won’t be, not for years. The same limited acceptance can be said of Google Wallet which, like Apple Pay, is powered by NFC. That means both have slender merchant acceptance for now.

But a kicker is that the Galaxy S6 will also be NFC capable, said Tom Villante, CEO of payments processor Yapstone. That dual track payment technology gives Samsung a headstart that, right now, no one else can match. On paper at least, every merchant that accepts Apple Pay will, on launch day, also accept Samsung Pay.

Note: Samsung Pay is not expected to be available until the summer. But already pundits are pondering the Apple Pay versus Samsung Pay faceoff, and this is a fight that involves you. How? Probably this year you need to decide which camp you are in, because, suddenly, the mobile payments battlefield is getting hot, sides are being taken, and - probably - we will see much more takeoff for mobile payments, soon.

Should you wait for Samsung Pay? Yapstone’s Villante is skeptical. He said that Apple can insist Apple Pay be on its phones. Google - because it bought various assets of payments company Softcard, owned by AT&T, T-Mobile, and Verizon - has assurances it can get its wallet (now known as Android Pay) on Android phones. But Samsung has no such control, said Villante.

He is right. The carriers decide what software comes pre-loaded on Android phones and - because of the Softcard deal - it is easy to see them vetoing Samsung Pay, even on Samsung’s own phones.

Apple will also keep narrowing Samsung’s on-paper lead in merchant acceptance, because rising numbers of NFC terminals are inevitable, said Bob West, chief trust officer at cloud security company CipherCloud.

Then, too, Apple has set a high bar with Apple Pay, said Pascal Caillon, general manager of North America for proximity mobile commerce company Proxama.

“The Apple Pay user experience is nearly perfect,” said Caillon. He said there was much to like about LoopPay and, by extension, Samsung Pay - but that technology just is not as slick as Apple Pay.

David Eads, CEO of Mobile Strategy Partners, is even more skeptical about Samsung’s chances.

“They bought LoopPay just to say, ‘We, Samsung, matter too in payments,'” Eads said. “The Apple share of payments will continue to grow.”

“If mobile payments are going to work,” added Eads, who emphatically believes they will, “they are first going to work on an iOS [Apple] device.”

There you have the early verdict: there are no compelling reasons to rush to pre-order a Galaxy S6 for its mobile payments technology. Especially not with hot rumors that the new iPhone 7 will hit the stores in September and, almost certainly, suggested multiple experts, will come polished with Samsung Pay kill features.

Said CipherCloud's West: “If I were [Apple’s] Tim Cook I would not be losing sleep over Samsung Pay.”

—Written by Robert McGarvey for MainStreet

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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