Samsung Pay Announcement Emphasises Growing Impetus for NFC

POSTED BY Windsor Holden
One of the more interesting announcements at the recent Mobile World Congress in the payments space was Samsung’s confirmation that it would be introducing a proximity payments solution in its Galaxy S6 smartphone.

The solution – with the unsurprising moniker of Samsung Pay – enables payment both via NFC (as with Apple, using an embedded secure element) and via magnetic stripe technology.

Firstly, this provides further evidence of the galvanising effect that Apple has on its competition. As our latest research on NFC argued, Apple has form when it comes to educating the public about the benefits of various technologies and services, consumer smartphones, app stores and tablets being the most obvious examples. The process goes something like this: Apple announces product, loudly and often; public rather likes the product and starts buying/using it in rather large numbers; Apple competitors latch onto its coat-tails and bring out similar products.

Secondly, Samsung’s decision to complement NFC with a technology which is everywhere in the US (but is being finally sidelined there, as it has been due to its relative susceptibility to fraud) highlights its desperation to achieve a greater reach than Apple. However, (a) the market share of the S6 is likely to be far lower than that of the iPhone 6 and (b) with EMV mandated by October 2015, most terminals will have NFC as well as CHIP & PIN capabilities, so Samsung’s window or opportunity here is extremely low. Oh, and (c): during that brief window, Samsung is unlikely to sell many additional handsets purely on the basis that they offer a soon-to-be-outmoded payment option.

However, the real winner from this is likely to be NFC. Freed from the dead hand of the SIM-based SE model, the combination of Apple’s embedded SE option, and the cloud-based SE enabled by HCE (Host Card Emulation) has given the technology a real shot in the arm. The early indications are that Apple Pay usage is markedly higher than that of any previous commercial service, dwarfing that of the ill-fated Softcard. Hence Samsung’s desire to jump aboard before it’s too late.