BARCELONA – In traditional "unpacked" Samsung style, the South Korean firm launched its anticipated mobile payment system, Samsung Pay at the 2015 Mobile World Congress here on Sunday, March 1.
Unlike Apple Pay, however, Samsung's new platform also uses the company's proprietary Magnetic Secure Transmission (MST) technology to allow for cashless payments at virtually any traditional register that accepts credit cards.
Samsung also announced important deals with major credit card companies, including Visa, MasterCard, and American Express, as well as financial institutions, such as Bank of America, Capital One, and Chase.
While NFC contactless payments are widely deployed in Europe, the US has yet to shift to EMV Chip security and contactless POS systems and cards. Samsung's decision to incorporate two different contactless systems could give the company a significant advantage in the North American market.
Security will be a different issue.
While EMV contactless solutions use tokenization and one-time approval codes, the MST solution based on LoopPay will transmit the credit card information in the same way a credit card swiped at a payment terminal does. The level of security of each transaction will depend on the issuing bank and the payment terminal.
Like with Apple Pay, users will be required to use fingerprint authentication to start a transaction.
The use of MST -- in my view -- is basically a bridge to make Samsung Pay attractive to consumers in the US, where the road to full EMV and contactless technology has only just started. From the consumers' point of view, Samsung Pay will enable them to tap and pay with the Galaxy S6 at over 90% of retail locations in the US.
MST will not work in Europe, where EMV chip transactions are the norm and only NFC contactless transactions are allowed. Magswipe is only employed for the non-EMV cards that American travelers use.
I believe MST will be short-lived, since Visa and MasterCard are committed to NFC technology for secure EMV contactless payments. MasterCard announced last year that by 2020 all payment terminals in Europe must accept contactless payments.
Little information is available about the NFC technology used on the Samsung Galaxy S6. NXP declined to comment when I asked them about it this morning. As happened with the iPhone 6, we'll probably have to wait for the Galaxy S6 teardown to discover the NFC chipset embedded in the device.
Most likely Samsung has embedded NXP's PN66T module in the device, since the chipset is Europay-, MasterCard-, and Visa-certified (EMVCo). It supports American Express ExpressPay, thus fully covering the three big credit card companies, ensuring compatibility and interoperability with existing and future payment solutions.
By combining NFC and MST, Samsung has a significant advantage over its competitors in luring customers to mobile payments. The combination of Galaxy S6's beautiful design, the possibility to pay at standard magswipe terminals in the US, and the simplicity of use will probably attract a large number of early adopters.
[ Read about Google's mobile payment plans. ]
"From the start, Samsung's vision for mobile payments and commerce has been centered on security, wide acceptance, and a simple user experience. [... Offering] tokenization services in conjunction with Samsung's unique MST (magnetic secure transmission) and NFC technologies, Samsung Pay makes secure contactless mobile payments possible at most NFC or traditional magnetic POS terminals," says Dr. Injong Rhee, executive vice president at Samsung. "Samsung's KNOX security platform and fingerprint authentication make Samsung Pay transactions highly secure and easy to use."
The Samsung Galaxy S6 will be available April 10 in 20 countries, and Samsung Pay is scheduled to debut this summer.
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