Monday, 22 February 2016 11:48

It does not matter how we pay – we all pay anyway

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Samsung Pay, Apple Pay, Google Pay, Pay Wave, PayPal, credit/debit/savings card, cash and gift cards – they are all designed to remove money from the consumer as painlessly as possible.

What you may not know is that a percentage of each transaction – generally called a merchant fee and an Interchange fee – pays for the cost of using a payment system and for credit card loyalty programs.

Samsung introduced its contactless payment capability to Australia in 2013 when it partnered with some of Australia’s major financial institutions to provide Samsung Galaxy smartphone users (S6 and Note 5 or later with fingerprint authentication) the opportunity to use their mobile device to make purchases at compatible point of sale terminals.

Samsung Pay – coming to Australia this year - is the next evolution in Samsung’s mobile payment system designed to act as complete wallet replacement for users. It will offer Australians a simple, safe way to shop and spend almost anywhere, on existing point-of-sale (POS) terminals. Importantly it does not charge interchange fees to partners so it will be widely accepted.

It has provided a Q&A explaining the technology.

  • Samsung Pay can support financial and tokenised transactions through Near Field Communication (NFC) and Magnetic Strip Transmission (MST) technology.
  • NFC and MST transaction functionality form the basis for how the majority of payment and tokenized transactions are processed by financial institutions and retailers around the world and in Australia.
  • Samsung Pay will have the capability to support online payments in applications and web.
  • Samsung’s proprietary mobile payment technology which controls the transfer of transactions and information (via MST) can send secure, encrypted card information to a magnetic card reader.
  • Samsung Pay can support limited transactions without internet connectivity in offline mode.

Samsung Pay has an open engagement model designed to operate with a wide range of partner’s systems and payment channels.

  • This model is designed to support cards (payment and non-payment) from multiple providers within a single digital wallet, for the convenience of users.
  • The engagement model has also been designed to provide an easy experience for partner organisations to operate with.
  • Samsung Pay does not charge transaction interchange fees to partners.

Samsung Pay has the ability to offer users a “total wallet replacement” through support of a variety of card types including:

  • Payment solutions: Support in-store payment and online / in app payments, with the goal of being an alternative to physical bank cards and credit cards.
  • Services solutions: If the MST component is adopted in Australia, support partner services currently provided in physical form often in the form of magnetic strip cards. Service solutions may include gift cards, loyalty cards, transit, and membership identification.
  • Samsung Pay has the potential to be leveraged by an array of partners, ranging from major retailers to government departments and financial institutions.

Samsung Pay has a simple, three step process for making payments in-store:

  • Swipe up: Users can swipe up from the home button to access a desired service. Or, select the Samsung Pay app icon from their home screen or app tray.
  • Scan: Users can authorise transactions by scanning their fingerprint or entering their PIN.
  • Pay: To finalise the transaction, users then hold their phone over the card reader.

 Samsung Pay takes advantage of Samsung’s most advanced mobile security features, including:

  • EMV Tokenisation: Samsung Pay is based on the global EMVCo5 standard for mobile transactions. This standard uses a temporary digital token to replace card information. Using a digital token helps keep people’s personal and card information secure.
  • Samsung KNOX: In the event that a phone is lost Samsung’s built-in KNOX technology helps a user’s card and payment information stay secure and safe.
  • Remote Deactivation: If a phone is lost the user can also deactivate Samsung Pay remotely using Samsung’s Find My Mobile service.
  • Fingerprint Authorisation: Samsung’s advanced fingerprint technology helps safeguard purchases with a quick touch of the finger from the approved user.

Samsung Pay in other markets

  • Samsung Pay is already available in the U.S and South Korea and in addition to Australia will be launched in China, Spain and the U.K in 2016.
  • In South Korea, Samsung Pay launched in August 2015 and in its first month recorded 1.5 million total transactions, accumulating $USD 30 million in transaction value.
  • In 2015, more than 10 million transactions were performed on Samsung Pay in Korea with a value of more than US$211 million (250 billion KRW).
  • In December 2015, Samsung Pay welcomed a transportation card service for South Korean users. This brings together the local T-Money and Cashbee transportation payment methods into one easy-to-use mobile service.
  • Samsung Pay was introduced to the US in September 2015 and has experienced a tremendous response in that market. It is now the most accepted mobile payment system in the US. Samsung is now working with the four payment networks: American Express, Discover, MasterCard and Visa, major banks including American Express, Bank of America, Chase, Citi, PNC, U.S. Bank and all of US carriers to extend Samsung Pay to the U.S.
  • In December 2015, Samsung announced that in the U.S market Samsung Pay supports popular gift cards for over 50 merchants in the U.S. including, Toys“R”Us, Domino’s, Nike and eBay.

You can read more at Samsung’s US website.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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