Soon there will finally be an Android competitor to Apple Pay. Samsung Pay is set to launch in the U.S. next month. But another competitor, CurrentC, the retailer-backed payment system from Merchant Customer Exchange, may not reach the market until next year.
Samsung Electronics said Samsung Pay would launch in Korea on Aug. 20 and on Sept. 28 in the U.S., with plans to roll out the service to the U.K, Spain and China. The announcement was made as the company unveiled its two newest mobile devices, the Galaxy S6 edge+ and the Galaxy Note5.
Samsung Pay will be preloaded on the two new models, and available as a free software upgrade in the U.S. and Korea this month for the Galaxy S6 and S6 edge. Samsung will allow a select number of U.S. users of the Galaxy S6, S6 edge, S6 edge+ and Note5 to participate in a beta trial that will begin Aug. 25.
A key advantage Samsung Pay has over other mobile payment systems is that it works with most existing point-of-sale terminals in retail stores (except fuel pumps) using both Magnetic Secure Transmission and Near Field Communication technologies. Because of that, PaymentsSource reports that Samsung Pay could gain the support of a broader array of financial institutions in a shorter time than Apple Pay. "The issuers are using this to pressure Apple to renegotiate their deal," said Richard Crone, CEO of mobile-payment advisory firm Crone Consulting.
American Express, Visa and MasterCard are already on board, as well as Bank of America, JPMorgan Chase, Citigroup and U.S. Bancorp, among others. "It's not about being first in the market, but creating compelling technology," said Injong Rhee, exec-VP at Samsung. "We are partnering with card networks, issuers and acquirers, and Samsung Pay will also be the first to support contactless payment for store-branded credit cards. The list of partners will only grow."
Samsung Pay works by swiping up on the home screen, selecting the credit card, scanning a fingerprint, and then tap-and-pay. For security, the system uses tokenization, Samsung's Knox technology and fingerprint authentication. Samsung Pay is built on the technology of LoopPay, which it acquired earlier this year.
Samsung will eventually compete with PayPal mobile, CurrentC and Google's Android Pay, which will replace Google Wallet. Of the Android compatible payment systems, only PayPal is available in the United States. A South Korean report by the Yonhap News Agency said LG will launch a new device in October with Marshmallow—the next Android operating system—and Android Pay preinstalled.
While MCX will begin a pilot of CurrentC in Columbus, Ohio, this month, a wider rollout will not be rushed if the product is not ready, and may be pushed back to 2016, Brian Mooney, MCX CEO, told Re/Code.
"This is a long game," Mooney said. "Certainly going faster is always better—that's not necessarily a debatable point. But we're going to do it right."
MCX is backed by a consortium of retailers, principally Walmart, Target and Best Buy, and includes many others in its network, including Kohl's, Dillard's, Giant Eagle, Sears, 7-Eleven, Hy-Vee, Old Navy, Wawa, Publix, CVS, Lowe's, Bed Bath & Beyond, Wendy's, Dick's Sporting Goods and Rite Aid. Most of these signed an exclusivity agreement in 2012 that, in many cases, is about to expire. The retailers are then free to adopt mobile payment apps that are available, such as the recent news about Rite Aid signing on with Apple Pay.
CurrentC differs from the other payment systems in that it is not aligned with the major credit and debit card networks. Consumers have to use their checking accounts or store credit cards. This saves retailers in interchange fees, but may hinder CurrentC from getting the traction needed to compete. A long delay in launching the system will make it even harder to gain consumer acceptance. Also, some of the other payment systems will come preloaded on new mobile devices, while MCX will have to rely on people downloading their app.
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