Samsung acquired LoopPay in February and quickly introduced it during their Barcelona event that unveiled their new Galaxy S6 smartphones. Google was just reacting too slowly to Apple Pay and Samsung decided to act unilaterally prior to the Barcelona trade show. While Samsung is gearing up to launch its own mobile payment service in Korea and the U.S this summer, they've decided to stir things up by announcing that they won't be collecting fees on Samsung Pay as a measure to help them dominate the rapidly-growing mobile payments market.
It's being reported today in Korea that Samsung's move appears to be aimed at securing new markets related to mobile payments, rather than putting a halt on its market expansion by demanding 0.0015 percent fees.
According to sources in the credit card industry on March 6, Samsung has decided not to charge its partnered credit card companies for Samsung Pay. Their partners include Shinhan Card, Samsung Card, KB Card, Hyundai, Lotte Card, NH Card, Woori Card, Hana Card, and BC Card. The company is also not planning to demand that value-added network service providers and online payment service providers pay fees for using its mobile payment service. This is likely to quickly expand into the U.S., though no U.S. partners were listed as of yet.
Samsung's decision is attributable to its belief that it will be possible to widen the distribution of Samsung Pay by providing its payment service free of charge. Industry sources are saying that Samsung's move is aimed at its biggest rival, Apple. Once Samsung Pay is widely used, it can sharpen its competitiveness in the smartphone business against Apple.
In addition, Samsung could be ahead of Apple in the mobile payment business itself as well. Samsung Pay, which supports NFC, magnetic secure transmission (MST), and bar codes for mobile payments, has already secured more affiliated stores than NFC-based mobile payment service Apple Pay.
The report noted that "The NFC payment service accounts for less than 10 percent of the mobile payment service market, but the weight of the MST-enabled service is more than 90 percent. So, I think that Samsung Pay that supports both NFC and MST will be distributed faster than Apple Pay," said Shin Jong-kyun, president of the IT & Mobile division at Samsung.
To date, Apple Pay is in the lead regardless of the grand claims made by LoopPay or Samsung. During Apple's Financial Conference Call in January, Apple's CEO told analysts that Apple pay was off to a very fast start with over 750 banks and credit unions signed on to bring Apple Pay to their customers. He also noted that only after its first months of service, Apple Pay made up more than 2 out 3 dollars spent on purchases using contactless payment across the three major U.S. card networks. Cook further noted that with merchants who already use Apple Pay, the rates are even higher.
In February we posted a report titled "A Major Report by Good Technology Shows that iOS Activations in the Enterprise Climbed to 73% in Q4 2014," which indicates that enterprise users from executives to sales are likely to use Apple Pay more over time than Android businesses. It indicates that adults in general will use Apple Pay more than teenagers who purchase Galaxy Phones to save money.
The Google Wallet pushed by Samsung went nowhere. In fact let's call it what it really was: a complete and utter failure. Will LoopPay actually do any better for Samsung? Only time will tell.