Samsung Pay to challenge Apple Pay later this year

Samsung is stepping up to the plate as it finalizes its plan to catch up with Apple on the mobile payments front, pending the launch of Samsung Pay for Android, which will be released in Korea and the United States in the second half of 2015 for use on the Samsung Galaxy S6 and Galaxy S6 Edge smartphones.

"The consecutive release schedule to the rest of the other countries following Korea and the U.S. in the second half of the year is still under discussion," said Samsung Electronics' managing director, Park Jin-young, during a first quarter earnings report conference call last week, reported WhoWiredKorea. "The compatibility option with the smart watch will only be disclosed during the launch."

Samsung Pay will use the same magnetic secure transmission technology (MTS) that Samsung acquired in its recent purchase of LoopPay. As a result, the vast majority of U.S. retailers should be able to accept it without changes to their existing hardware or infrastructure, reported TechCrunch.

Samsung Pay will also make use of near field communication (NFC), so its mobile wallet should be compatible with the same terminals required by retailers offering Apple Pay. However, with MST technology, the new payment system should also be compatible with traditional credit card readers.

Samsung has deals in place with MasterCard and Visa payment networks, and it's also in talks with American Express, Bank of America, Citigroup, JPMorgan Chase, U.S. Bank, among others. Because its mobile wallet will be compatible with existing magstripe terminals, Samsung estimates that it could reach as many as 30 million merchants worldwide following release if the payment providers all sign up, reported Business Insider.

Samsung Pay will be integrated into Samsung devices at the system level, so users can add their own cards and then activate the wallet by swiping from the bezel, which launches the Samsung Pay app and allows users to choose their payment method. Users will then use the new fingerprint sensor to authenticate the transaction before tapping the merchant terminal to complete the purchase. Thusly, Samsung Pay's mobile checkout will require more steps than Apple Pay's—which automatically launches the payment process and selects the default registered card when in proximity of an active terminal, leaving fingerprint authentication as the only extraneous step.

One big plus for Samsung Pay is its compatibility with legacy infrastructure, which should help it maximize its reach. Therefore, Samsung may have an easier time of convincing merchants to adopt, meaning more time can be dedicated to educating and motivating consumers.

And in terms of security, Samsung Pay uses Knox, a containerization technology for higher-end Samsung Android devices, as well as Arm's TrustZone data isolation technology, which enables processors to keep payment card information safe. Samsung Pay also uses tokenization for an added layer of security intended for when users choose traditional checkout with a magnetic card swipe.

Samsung previously said the payment service would launch in the summer, so the "second half of the year" timeline is somewhat more vague, suggesting that Samsung may be experiencing delays.

For more:
-See this WhowiredKorea article
-See this TechCrunch article
-See this Business Insider article

Related stories:
Apple Pay on a roll, signs Best Buy, Discover
Samsung in negotiations to launch its own mobile payment system
PayPal, Samsung, Google put mobile payments in the spotlight
Apple Pay fraud 'rampant' says payments expert
Bloggers attack reports of Apple Pay fraud