Samsung Pay poised to make its move

Mobile payments may be the way of the future — but Samsung Pay is willing to bet backwards compatibility will give it an edge over Apple Pay and Android Pay.Samsung Pay

Already launched in South Korea, Samsung Pay will launch in the U.S. on Sept. 28, 2015 with a technology that may make it compatible with more terminals, compared with other mobile payment platforms.

If you’re considering Samsung Pay as a proxy for your plastic, here’s what to know:

  • What it is: If you’re familiar with mobile payments, there’s not much new to see here — Samsung Pay allows you to store electronic versions of your payment cards in a virtual wallet. When you enter your card info into the wallet, the issuer sends back a series of numbers that is not your account number, aka a token. It is this token that’s securely stored on your device – and what’s transmitted to the merchant (along with a one-time-use cryptogram for verification) when you pay. In theory, this makes mobile phone payments more secure than plastic card payments because data thieves can’t make off with account numbers in hacks.
  • How it works: As with Apple Pay, Google Wallet, Android Pay and Softcard (RIP), Samsung Pay relies on near field communication (NFC) technology. NFC lets two devices communicate at close proximity via radio waves – hence the wave-and-pay nature of the transaction when you pay by phone. You can tell if a payment terminal is NFC-compatible by looking for this symbol:

    NFC symbol

    Retailers partnering with Samsung Pay may have additional Samsung-specific signage and stickers, too – but the app should work with any NFC-capable terminal, even if it has, say, Apple Pay decals.

    You don’t need to launch the app before making a payment. Instead, you’ll swipe up on your screen, choose a card and then authenticate via fingerprint.

  • How it’s different: There’s one major difference between Samsung Pay and Apple Pay et al. — its compatibility with terminals. NFC requires terminals to be configured to accept contactless NFC payments. But in Feb. 2015, Samsung made an interesting move by acquiring a company called LoopPay, which specializes in a technology that allows mobile phone payments with terminals that aren’t configured for NFC. LoopPay uses Magnetic Secure Transmission (MST), which uses electronic signals to send card data (stored in your phone) to the terminal’s old-school magnetic stripe reader. In other words, even terminals that haven’t been updated for NFC can read the cards in your Samsung Pay wallet. That makes Samsung usable at more stores than Apple Pay and Android Pay.
  • Which cards you can use with it: Samsung is compatible with American Express (a CreditCardForum advertising partner), Visa and MasterCard. However, card-issuing banks need to be on board as well for their individual cards to work with the app. As of now, Apple Pay has a head start and has both large banks and small regional issuers on board. That’s not saying Samsung won’t catch up, though.
  • Which phones it works on: The following Android devices are compatible with Samsung Pay: Galaxy S6, Galaxy S6 Edge, Galaxy S6 Edge+, Galaxy Note 5. It’s unclear if it will be supported by all carriers – Verizon has stated that it’s “evaluating” the technology.

Samsung Pay is making its debut after Apple Pay and Android Pay have already soaked up the spotlight. It also trails Apple in U.S. smartphone market share (about 30 percent, compared to Apple’s 41 percent).

However, it’s the first mobile payment platform in a while that offers unique value – compatibility with older terminals. That could give it an edge (and allow it to quickly take root in the mobile payments ecosystem) until new rules regarding EMV spur most merchants to upgrade their equipment.

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