Samsung has turned up the heat in the increasingly crowded mobile payments space with the launch of its Pay service – offering a potential rival to Apple, Google and others, provided that it can deliver on user experience.

Samsung Pay will appear first in the summer in the US - later in other markets - and will allow consumers to make tap-and-go payments with a smartphone. It will rely on the contactless NFC payment infrastructure already used by competitors including Google Wallet and Apple Pay, as well as communicating with magnetic card payment terminals, via technology recently acquired by Samsung when it bought LoopPay.


It is being introduced as Google is moving to strengthen its position in the mobile payments market to better compete with Apple Pay. While the search giant has struggled with its Wallet service - launched in 2011 for US customers - it has moved to strengthen its proposition, with a recent acquisition of intellectual property from Softcard.

According to Ovum analyst, Eden Zoller, if Samsung can execute on delivery of its own service successfully, it could rival the mobile payment systems offered by its rivals.

“Samsung is still at an early stage on its path to becoming a mobile wallet service provider, but if it does manage to pull its various assets into a joined-up proposition then it will compete head-to-head with Apple, which is snapping at its heels in terms of smartphone market share,” Zoller said.

To gain ground, Samsung will need to bring together its existing mobile commerce assets. These include a loyalty-oriented digital wallet service that allows Galaxy owners to store coupons, tickets, and membership cards, similar to what Apple offers users through its Apple Passbook. Samsung also owns location-based marketing platform Placedge, which uses Bluetooth low energy beacon technology.

“Samsung will need to move quickly to enhance Samsung Pay with other m-commerce related assets, just as Apple is doing with Apple Pay,” Zoller said.

However, not all are convinced that Samsung can offer a significant challenge to Apple, with user experience not typically seen as the company's strong point

“Samsung’s lack of software DNA will still prevent it from delivering truly differentiated service experiences like Apple does with its premium ecosystem,” said Forrester vice president and principal analyst, Thomas Husson.  

“This is particularly true when it comes to payments and wallets: Despite broader acceptance among merchants, further to the LoopPay acquisition, Samsung Pay is unlikely to offer the same level of convenience and trust as Apple Pay.”

One of the advantages that Samsung Pay has over Google Wallet, however, is the role it plays in the payment process.

While with Google Wallet all payments are run through Google – meaning  the company sees every purchase a consumer makes – with Samsung Pay, as with Apple Pay, the company doesn't have access to that data.

“In the case of the Google Wallet, retailers feared what Google might do with the payment transaction data,” said Michelle Evans, senior consumer finance analyst at Euromonitor International.

“The fact that Samsung is looking to leverage the existing technology that is found in many merchant terminals today rather than requiring some sort of an upgrade is a big plus for the future of Samsung's future mobile wallet.”