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Samsung, PayPal each reach for bigger mobile payments role

With Google is angling to dominate Android mobile payments, Samsung is moving quickly to make its own mark with the launch of Samsung Pay while PayPal has acquired MCX partner Paydiant, giving it access to major retailers.

The mobile payments space continues to heat up as handset manufacturers, financial solution providers and others look to shore up their own piece of the action now that Apple and Google appear to be the ones to beat. With this in mind, Samsung said yesterday that it will launch its payments solution just weeks after acquiring LoopPay while PayPal announced it acquisition of Paydiant, which is working MCX to launch a mobile payments app for many of the largest retailers, including Walmart, Target and Dunkin’ Donuts.

“Since [Samsung Pay] won’t be launched until summer at the earliest, and since it only applies to the GS 6, the number of enabled devices will be very small,” said Thad Peterson, senior analyst at Aite Group, Atlanta.

“Also the AT&T, Verizon and T-Mobile will be pre-loading the Google solution on ALL of their Android devices so it might be hard for Samsung to grab share of mind with potential users,” he said.

Jockeying for dominance
While Samsung acquired mobile payments company LoopPay only a couple of weeks ago, the company has already announced its plans to launch a solution based on LoopPay’s Magnetic Secure Transmission technology, in a reflection of the quick pace at which the mobile payments landscape is evolving so far this year.

LoopPay’s MST technology works with legacy point-of-sale terminals, generating a signal that makes the terminals think a magnetic credit card has been swiped.

These older terminals do not accept near field communications technology but are still available in a number of retail locations, which is one of the reasons why mobile payments based on near field communications, which require newer terminals to process a contactless transaction, have not taken off.

Since Samsung Pay will also leverage NFC, it has the potential at launch to be available a wide number of retail locations, something that could appeal to consumers.

However, once drawback will be that Samsung Pay will only be available in the new Galaxy S6 or S6 edge devices in the United States and South Korea.

Samsung Pay will also leverage tokenization, which replaces credit card numbers with a random code and is supported by Visa, MasterCard and others.

Several partners have already signed up for Samsung Pay, including MasterCard and Visa.

Android leader
As the biggest manufacturer of Android handsets, Samsung is hoping the strategy will help it gain a foothold in Android mobile payments, where there is currently a leadership void.

However, Google’s recent acquisition of Softcard’s technology suggests the technology company is looking reinvigorate its mobile payments strategy, which has been languishing for a couple of years (see story). The deal includes an arrangement whereby Google Wallet will come pre-installed on Android phones sold by AT&T, Verizon Wireless and T-Mobile USA, the parties that created Softcard.

Google also said this week that it is working on Android Pay, which will by an API layer enabling other companies to support Android payments in bricks-and-mortar stores and via apps.

In-store payments
PayPal was an early leader in mobile payments and processed $45.6 billion in mobile transactions last year.

However, the company has seen its fortunes fade now that the credit card networks and big-name technology players are paying more attention to the space.


Hoping to strengthen its hold, PayPal has acquired Paydiant, which provides a white label platform enabling retailers to create their own mobile wallet apps. Customers include Subway, Capital One and MCX, the consortium of major retailers with plans to launch a mobile payments solution. The retailers involved in the project include Walmart, Target, Kmart, Best Buy, Dunkin’ Donuts and CVS.

It is clear that anyone with an interest in mobile payments is working furiously to shore up their interest following Apple’s launch of Apple Pay last fall.

Samsung Pay could have an advantage of Apple Pay in that it will be acceptable at more retail locations.

However, its success will depend on how strong the demand is for the S6 phones.

“MST is a transitional technology, that will lose importance as EMV/NFC gains traction,” Mr. Peterson said. “They appear to have a good contactless solution to enable EMV so that won’t be a long term issue.

“The big question, aside from visibility with customers and limited distribution, is the user experience,” he said. “Apple has created a very high standard and Samsung (and Google) will have to get in the same ball park to be competitive long term.

“Google has the primary U.S. operators, experience with wallets/payments, and they’re embedded in the OS.  I think Google is in a better position for the long term.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York