A lot of people have a preferred method of payment; many enjoy the freedom of paying for everything with a card, especially if it’s contactless, while others still rely on the reassurance of cold, hard cash for their transactions. The elderly still often like to use cheques, while Paypal allows you to do everything digitally. But ultimately, it doesn’t matter what you or I prefer when it comes to payment; it’s always the decision of the powers that be, namely banks, governments, and retailers, that decide what stays and what goes when it comes to spending options. Take the introduction of Chip & Pin, for example, plenty of people didn’t like it, but it was tough, you had to put up with it. Mobile payment via your smartphone is something that’s been brewing for a while, between the advent of wireless technologies such as NFC, and the introduction of biometric scanners for your fingertips, face, or eyes, the pieces of this payment puzzle have been slowly coming together. It’s taken a while to get going, however, because big banks, credit card companies, and perhaps most importantly, retailers at the end of the chain, have been somewhat hesitant to get fully onboard. But major tech companies have a lot of muscle to flex driving some of the biggest consumer trends on the planet, and ultimately have persauded everyone to get involved by formulating big payment structures; Apple has Apple Pay, Samsung has Samsung Pay, Google has Android Pay, and between them all they are effectively saying “this is happening”.
In order to get even more people using Apple Pay, Apple has now confirmed those with older iPhone handsets –– iPhone 5s, iPhone 5 and iPhone 5c –– will be able to access the service. The catch? You’ll need to buy an Apple Watch. This is a very clever move and one that is typically Apple. But the added bump it’ll bring cannot be understated; there are literally tens of millions of iPhone 5s/5/5c users in the US and elsewhere.
“The way it works is that the Apple Watch also has an NFC chip that makes mobile payments possible,” says CNET, “but the watch itself doesn’t have TouchID, the fingerprint reading function used to authenticate users of an iPhone paying for items via Apple Pay. Instead, Apple Watch users will either enter a password on the watch or touch their fingerprint sensor on their iPhone after they’ve put on the wearable, which unlocks Apple Watch. (TouchID is supported on smartphones, the iPhone 5S, iPhone 6 and 6 Plus, as well as tablets, the iPad Air 2 and iPad Mini 3.)”
“When Apple first introduced Apple Pay back in September, the company proudly boasted that you could use its safe, contactless payments solution for iPhone in about a dozen different retailers. But, just a few months later, during Apple’s Q4 earnings call in January, CEO Tim Cook said Apple Pay accounted for two out of three dollars spent via contactless payments,” reports Business Insider.
But it’s not just Apple and Google that want a piece of the mobile payments space. Nope. Samsung does too… and it’s hoping to cash in big time with its mobile payments solution in the second half of 2015. Samsung Pay, as it’s known, is already live in South Korea, but is expected to arrive in Europe very shortly.
In fact, as of February 12 2016, the head of Samsung Pay Europe has revealed that the service will land in the UK and Spain “very soon,” promising that further details will be revealed at MWC 2016 in Barcelona later on in February. In other words, we’re expecting everything to become clear when the firm announces the Galaxy S7 and Galaxy S7 edge just prior to the Spanish mobile expo!
But it’s not just Apple, Google and Samsung that are doing mobile payments. NOPE! LG is getting in on the action as well:
“LG customers will soon be able to use their phones to pay for everyday items after the firm announced it was developing its own mobile payment system,” reports The Mail. “The firm has signed an agreement with Shinhan Card and KB Kookmin Card to bring contactless payments to its customers in South Korea. LG did not reveal when LG Pay will launch, if it will be expanded to more regions or any more details about the system but it is expected to rival the likes of Apple and Samsung Pay.”
In order to complete with Apple Pay, Samsung spent $250 million on payments start-up, LoopPay. Samsung acquired the Massachusetts-based startup last year as the basis for its Samsung Pay service which launched alongside the Galaxy S6.
“LoopPay invented a technology that originally allowed shoppers to pay for purchases in stores by placing a special piece of hardware — such as a fob or a smartphone case — near where you would normally swipe a credit card. With the acquisition, Samsung is embedding the LoopPay technology into its new phones, so shoppers can tap and pay with a new Samsung Galaxy 6 rather than whipping out a credit card or cash,” reports re/code.
As you may have guessed from the name, Samsung Pay is a direct competitor to Apple Pay. Samsung’s new service has A LOT in common with Apple’s, but there’s also a few differences that set it apart. Here’s what you need to know.
Apple Pay vs Samsung Pay: Tokenization & Authentication
The first thing you need to understand about Samsung Pay and Apple Pay is that the underlying technology is virtually the same thing. Both use a tokenization process that allows your store credit and debit cards in your phone to keep their card numbers private and instead send a digital ID, or token, to the merchant’s terminal. This token pretty much ensures no one can lift your card details during transfer. The tokenization system in both Pay platforms is the Mobile Digital Enablement System (MDES) built by MasterCard.
On top of tokenization both Apple Pay and Samsung Pay require that any payment is confirmed by fingerprint identification. This biometric ID is how your phone knows it’s you making the transaction and not someone else. On an iPhone you use Apple’s Touch ID; on a Galaxy S6 you use Samsung’s new and improved fingerprint reader. I say “improved” because you simply now only have to tap your finger to the reader on the S6 instead of needing to swipe it along the reader as you did on the S5.
Apple Pay vs Samsung Pay: Transfer Technology
When we talk about the way both Pays transfer your card details is when the two systems begin to diverge. Both support NFC, but Samsung Pay goes a step further by supporting a system called Magnetic Secure Transmission, or MTS. If MTS sounds familiar it’s because it’s how credit and debit cards have been transferring your data for decades: by magnetic stripe swipes.
So in addition to an NFC chip Samsung devices that support Samsung Pay also have a special wire inside the phone that enables them to send a MTS transmission to any magnetic card reader. So even though you don’t need to swipe your phone (how awkward would that be?) you can use Samsung Pay at any terminal that accepts swipe cards. Simply hold your phone near the magnetic card reader and the MTS wire inside the phone will transfer the data just as the magnetic strip on the back of your physical cards do.
Apple Pay vs Samsung Pay: Supported Devices
Apple Pay is only supported on the iPhone 6 and 6 Plus for terminal payments and on the latest iPad Air 2 and iPad mini 3 for payments made in apps. Apple Pay will also be supported on the Apple Watch. Samsung Pay is only supported in the Galaxy S6 and Galaxy S6 Edge.
Apple Pay vs Samsung Pay: Supported Credit and Debit Cards
Both Apple Pay and Samsung Pay are supported by the biggest card issuers including Visa, MasterCard, and American Express.
Apple Pay vs Samsung Pay: Supported Banks
As of today over 90 banks and credit institutions support Apple Pay. Apple Pay has the advantage here as the big banks like Chase and Capital One support it as well as many smaller, local banks. Samsung Pay, when it launches this summer, will only support bigger banks like Chase and Bank of America at launch but, as with Apple Pay, is expected to add more institutions as time goes on.
Apple Pay vs Samsung Pay: Supported Merchants
This is an area where Samsung Pay is going to have the clear advantage. Why? It’s thanks to their support of MTS. NFC is still a fledgling technology and many merchants simply don’t have terminals that support it. But virtually EVERY merchant supports MST. Right now Apple Pay is only supported at about 200,000 stores in the US (including major chains like McDonald’s, Subway, Walgreens and more).
Samsung Pay, theoretically, on the other hand will likely be supported at all those stores and millions more thanks to MST. But MST should matter less as time goes on. Laws are coming into effect in the US this year that will require merchants to upgrade their terminals with newer NFC technology, so Apple Pay’s locations will grow. Still, it’s nice that Samsung Pay is “backwards compatible”.