Samsung on Thursday unveiled its mobile payments platform, along with its newest large phones, in a bid to rival to Apple Pay and Google‘s Android Pay.
But consumers have not started warming up to paying with their smartphone in numbers large enough to make a major impact, especially as more secure, chip-embedded credit cards are fast becoming the norm.
The new mobile wallet, Samsung Pay, is similar to Apple and Google’s systems but it’s also unique in a couple of areas.
Samsung Pay deploys a technology called magnetic secure transmission, or MST, to transmit a user’s credit card information to employees stationed at cash registers. Samsung has an advantage over Apple Pay because most existing credit card terminals should be able to accept payments via MST by waving the phone over the card reader. In contrast, Apple Pay uses Near Field Communication, or NFC, technology, which is being adopted by retailers but not widely enough and fast enough for most consumers.
However, Samsung Pay has some drawbacks compared to Apple and Google because it requires a few extra steps. Which leads to the huge question of when consumers overall will start using any of these mobile-payment systems on a regular basis. Taking out a credit card and swiping it is still the preferred method of paying for stuff, and it’s still easier than fumbling with a smartphone.
Security is the big issue that may turn consumers toward mobile payments — that is if the new chip-embedded credit cards do not ease concerns of shoppers wary of more data breaches.
Samsung says it uses a technology developed by credit card companies called tokenization, which does not require transmitting a person’s credit card numbers when at the store. However, both Android Pay and Apple Pay use this technology as well.
Banks have been sending millions of U.S. consumers credit and debit cards equipped with computer chips to improve the security of in-store purchases.
Merchants must upgrade their payment terminals by Oct. so they can read the chips on the cards. These new chip-embedded cards and their readers would bring the U.S. in line with card security standards used in much of the rest of the world.
It is estimated that about half of the 12 million card readers at payment terminals in the U.S. will be converted to support chip cards by the end of 2015.