Samsung Pay Transactions Top $30 Million Ahead of U.S. Launch
If it worked there, it will work here. That was the implicit message as Samsung announced the rousing reception its Samsung Pay service received in its home country of South Korea. Samsung said the new mobile payments system took in more than $30 million in transactions in that country between its launch on August 20 and September 20. Samsung Pay is due to debut in the United States on Monday.
The service generated more than 1.5 million transactions during that first month -- about 36 percent of the service’s users were active during that month and 10 percent of them used Samsung Pay every day, according to the company.
Samsung Pay lets users pay for items on the go at supported merchants using their smartphones. Samsung said the service’s advantage is its ability to let users pay without NFC (near-field communications) technology, meaning retailers don’t have to upgrade their equipment to accept the service. Apple Pay and Google’s Android Pay require NFC support from merchants.
Has To Battle Apple in U.S.
When it launches in the U.S., Samsung Pay will have to make up some lost ground. Apple Pay was launched almost a year ago in the U.S. and is now available in the U.K. That means Apple has been able to get banks, credit card companies and merchants on board with its service. Samsung’s challenge will be convincing many of those same entities to adopt its mobile payment service as well.
One way it can do that is by taking advantage of the fact that Apple Pay and Samsung Pay work on different devices and are aimed at different groups of users. Samsung Pay is compatible with its Galaxy S6, Galaxy S6 Edge, Galaxy S6 Edge+ and the Galaxy Note 5. Apple Pay, on the other hand supports not only its fleet of smartphones, but also the Apple Watch and various iPads. Samsung Pay will also support its Gear 2 smart watch after the wearable device is released, but transactions with that device will require NFC for retail transactions.
We reached out to Thomas Husson, a vice president and principal analyst at Forrester Inc., who told us that while $1 million per day looks impressive in absolute value, it’s a small portion of the payments processed daily in a country the size of South Korea.
More Services Needed?
"The main advantage that Samsung has when launching in the U.S. is that it is compatible with more locations thanks to the MST (magnetic secure transaction) technology," said Husson. "I don't think this is alone will be sufficient to differentiate in a market where competition is fierce and where Apple has a much more significant market share than in South Korea."
Then there’s the fact that Samsung's smartphone sales and market share have dwindled. In the United States, Apple has a 44.2 percent smartphone market share, while Samsung has 27.3 percent, according to ComScore.
"At the end of the day, retailers are mostly piloting these solutions and they will decide who brings the most benefit to them," said Husson. "Samsung needs to add more services, including loyalty services, into a combined checkout experience."