Rewardle should signed up Samsung Pay

CES 2016: Samsung Pay heads to Australia

Jan 8 2016 at 12:15 PM
by John Davidson

For Thomas Ko, the man tasked with getting Samsung users to make payments with their phones instead of their credit cards, the key to success isn't going to be Samsung's unusual payments technology.
The world's largest consumer electronics company, which has just announced it will be bringing its Samsung Pay system to Australia in 2016, is thought to have spent around $US250 million in 2015, buying magnetic stripe technology that will let Samsung Pay work with more retail terminals than either of the competing phone-based payments systems, Apple Pay and Android Pay.
But Mr Ko, the global co-general manager and vice president of Samsung Pay, says that the technology won't help Samsung much in Australia, which has already moved to the newer, more secure NFC-based technology, used by payWave and PayPass and supported by Apple, Google and Samsung.
Rather, Samsung's advantage will be that Samsung Pay is free, making it easier to get Australia's banks to support the payments system. Where Apple is said to charge a 1.5 per cent commission on all credit card transactions made through its Apple Pay, and as a consequence has signed up only American Express in Australia, Samsung charges banks and other card providers no commission whatsoever.

The goal of Samsung Pay, at least in the early days, is simply to help Samsung sell more phones, Mr Ko says.
"We don't charge a fee to the banks, and so far that has been one of the reasons why the banks are very receptive to our propositions," he says.
Samsung says it has already signed up at least two Australian banks to support Samsung Pay, though Mr Ko refused to say which banks.
Google, which is planning to launch the competing Android Pay in Australia early in 2016, and which also distinguishes itself from Apple by not charging transaction fees, says it has a handful of Australian banks, including ANZ, Westpac, St George and Macquarie, but not including Commonwealth Bank,which already has a payments app of its own that works on Android phones.


Samsung Pay will work on far fewer phones than Android Pay - Samsung Pay only works on the latest generation of Galaxy S and Galaxy Note devices, Samsung's most expensive phones, though there are plans to make it available on mid-tier Galaxy phones too - but Samsung officials say it will have a few advantages over Android Pay. (Which, incidentally, will also work on the same Samsung phones that Samsung Pay works on.)
One advantage is that Samsung Pay will work normally even when there is no mobile phone reception, such as in some underground train stations. Android Pay generates its security tokens in the cloud, and it needs an active internet connection to generate new tokens when stored ones have run out, whereas Samsung Pay generates its tokens on the phone itself.
Another advantage is the magnetic stripe compatibility Samsung purchased in 2015 from LoopPay, which officials say could help Samsung enlist loyalty cards into Samsung Pay, since a lot of loyalty cards have yet to move to NFC.
The payments system will work much like Apple Pay or Android Pay. Having signed their credit, loyalty and other cards up to Samsung Pay, Galaxy owners will simply have to swipe up from the bottom of their phone's screen, even when the phone is locked, to call up the payments system.

From there they can select the card they want to pay with, place their finger on the phone's fingerprint sensor to unlock the card, and from that moment they will have 15 seconds to wave the phone in front of an NFC reader, just as they would with a payWave or PayPass credit card, to complete the transaction.
Or, if the cash register only accepts magnetic stripe cards, they'll have to hold the phone a few centimetres away from the head of the card reader.
Little if any data about the transaction will be stored on the phone, and all the data will be owned by the issuing bank rather than by Samsung, Mr Ko says.
Should Samsung Pay take off, says Mr Ko, there's no guarantee Samsung will continue to view it as a completely free payments system designed only to sell Galaxy phones.

"Let's say you are Facebook. It's a free service, so everybody uses it. When you reach 100 million customers or 500 million customers, other monetisation opportunities might come up."
Samsung Pay is like that, he says.
"We believe that ... revenue (from phone sales) will be good enough, but maybe there will be opportunities for more.
"We wouldn't deny any kind of opportunity coming up in the future, but we need to see enough adoption before we can discuss anything else.
"We have got a lot more work to do. There is a whole lot more room for us to improve, before our customers begin to see the phone as a trusted payment instrument that they use daily, as much as they're using their plastic card.
"That's several years away," he says.
John Davidson interviewed Thomas Ko at the Consumer Electronics Show in Las Vegas, which he attended as a guest of Samsung.

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