Samsung Pay on the way, and a mobile-payment war brews

Singapore

THE mobile-payment space in Singapore moves forward on June 16, when Samsung Pay becomes available to users of the Samsung Galaxy smartphone.

To observers, the metric to track will be the adoption rates by consumers, which they say is the biggest challenge facing Samsung and its rival, Apple Pay, along with the EZ-Link Near-Field Communication (NFC) SIM card service rolled out in March.

Samsung Pay, announced by the South Korean electronics giant at a launch event on Friday, works by letting consumers add their credit and debit cards to selected Samsung Galaxy devices, and make payment by holding the devices near a merchant's contactless card reader.

The Republic will be the first South-east Asian country and fifth globally to get on board this payment platform. It was first made available in South Korea last August, and then extended to the United States, China and Spain.

At the launch, consumers holding Visa or MasterCard credit and debit cards issued by Citibank, DBS, POSB, OCBC and Standard Chartered will be able to use their compatible Samsung smartphone at nearly all payment-acceptance points that accept credit cards to make payments.

Running on a proprietary Magnetic Secure Transmission (MST) technology, which works with both traditional magnetic-stripe credit card terminals and NFC contactless-payment terminals, Samsung Pay will not be hamstrung by the typical S$100 transaction limit that other contactless payment methods have. To prevent fraud, the service uses an encrypted digital token to replace sensitive card information, and all transactions made via the service require fingerprint or a PIN for authorisation.

Meanwhile, Apple Pay, which was launched in April, works like its Korean rival but can be used only at NFC contactless payment terminals. Frost & Sullivan Asia-Pacific vice-president of ICT Ajay Sunder pointed out to The Business Times that the utility and convenience for end consumers are essentially the same for both services.

"There's definitely a big war brewing and I think that's why Apple launched Apple Pay in the Singapore market before Samsung did. But both platforms are about the same - from configuration to usage, to safety and even to partnerships with banks. So the key challenge, then, is the adoption rates by consumers and that's something you have to keep an eye on."

Mr Sunder said that if transaction data is anything to go by, consumers seem to be slowly but surely embracing mobile payments.

Singapore's largest bank and biggest card issuer DBS had more than 47,000 cards provisioned for Apple Pay in the first two weeks, it revealed on Thursday. Earlier this week, OCBC revealed that close to 40,000 of its cards have been used for Apple Pay; for UOB, the figure was about 19,000 cards.

Commenting on Singapore's pole position in South-east Asia as the first country in the region to receive both Apple and Samsung Pay, Forrester researcher Ng Zhi Ying told BT: "It's a logical move for them to break into the South-east Asian market via Singapore. We have the highest smartphone penetration globally and people do a lot of shopping on their phones, and with Singaporeans comfortable with cashless payments, the transition is now from cashless card payments to card-less payments."

Yet, Ms Ng feels that more can be done, especially with Android Pay - expected to be launched in Singapore this year - hanging over Samsung's head, since consumers "don't need a Samsung phone but simply an Android phone for payments".

Describing existing cashless solutions like Visa payWave and MasterCard PayPass as being already so convenient, she added: "One way for Samsung and Apple to get ahead is through loyalty systems. Something that Apple and Samsung has yet to launch is a digital wallet holding loyalty points and coupons, which combine with Pay, and that's something that provides attractive value for consumers. But to have such a system, you need all the partners in the ecosystem to do their part."

Meanwhile, the EZ-Link NFC SIM service, while convenient for public-transport usage, will struggle to see widespread adoption.

Said Ms Ng: "The less that you require consumers to do, and to change, then the more it will help adoption. The NFC SIM has an extra step that consumers need to do, which is to change their SIM cards, and that's an additional barrier to entry."