Samsung Pay sees increase in transactions

An unnamed customer pays using Samsung’s mobile payment system, Samsung Pay, in Seoul, Tuesday. / Courtesy of Samsung Electronics

By Kim Yoo-chul

Samsung Electronics says its mobile payment system ― Samsung Pay ― is becoming popular because of its easy to use magnetic secure transmission (MST) technology.

“More retailers in Korea joined with Samsung Pay because MST technology ensures quick, efficient and secure mobile payment transactions,” a company spokesman said. “The number of Pay users will clearly rise."

With Pay close to launching in the United States, Rhee In-jong, who is in charge of managing the company’s mobile payment business, said an average of 20,000 to 25,000 Pay customers have used the service a day since its launch in Korea on August 20.

Rhee said an average of 750 million won to 800 million won makes its way through the system a day and such a positive result is being attributed to the popularity of Samsung’s Note 5.

“This is a positive statistic for Samsung,” said Hwang Joon-ho, an analyst at KDB-Daewoo Securities.

But it remains to be seen whether the Pay system will have similar success in the United States because Apple Pay and Google Android Pay are ready to take off.

Samsung Electronics has acknowledged key issues about the service that need to be addressed.

In a recent meeting with local reporters, mobile chief, Shin Jong-kyun, said the world’s leading smartphone maker plans to expand the Pay system to budget models.

“Yes, we will do that,” he said. “The Pay system will be expanded into other product categories. Specifically, Samsung is eyeing wearable devices as Pay’s next destination.”

Some question whether the big retailers are ready to adopt Samsung’s MST payment technology when they are struggling with the transition to EuroPay, MasterCard and Visa (EMV) chip card requirements.

But Samsung believes they are.

Officials say this is mostly because MST builds on the core magnetic strip payment terminal technology already accepted by more than 30 million merchants globally.

Google and Apple’s mobile payments are relying on near-field communication (NFC) terminals.

“The portion of Samsung’s budget phones that cost less than $300 accounted for 60 percent of the company’s total annual shipments,” an official said. “This is the market that we can’t afford to lose.”

The main issue for Samsung before expanding Pay to budget models is how to cut the increased cost as a lot of parts will be needed to power the Pay system.

Some of Samsung’s budget models, such as the Galaxy A8, J5 and Galaxy Folder, do not support the Pay system and the J5 model does not support a fingerprint-identification system because of the cost.

Samsung Pay will be available in China and European countries including Spain and the United Kingdom later this year.

The company said it is open to launching the mobile payment service in countries with high credit card use, since those countries have the strongest interest in the system.