Credit card companies are keeping a close watch on Samsung's moves, since Samsung Pay has the potential to make the supply network of terminals at affiliated stores powerless with its own NFC technique. There will be no problem if Samsung develops a method for its mobile payment service compatible with existing USB dongle-based terminals. However, if the company supplies terminals with separate specs incompatible with Apple Pay or credit card companies, it is possible for the tech giant to dominate the market for Samsung Pay.

In a new Korean report today we find that industry sources learned yesterday that Samsung Electronics has started to develop its own Near Field Communication (NFC) technology for Samsung Pay. Samsung's move can be interpreted as a strategy to rule out credit card companies' influence.

There are two NFC methods at the moment. One is based on the Universal Subscriber Identity Module (USIM) of mobile carriers, which was adopted by NFC-based mobile payment service Apple Pay.

The other is based on Host Card Emulation (HCE), which was unveiled last year through Android 4.4 KitKat. The HCE architecture is receiving a lot of attention as a next-generation NFC technique, since it can store credit card-related information using credit card companies' cloud system instead of USIM. The method has been augmenting its power around the world, as shown by the participation of Visa and MasterCard in Feb. this year. Hence, the industry had anticipated that this technique would have been used in Samsung Pay. But it may not.

Sources are now claiming that Samsung is reportedly working to develop its own NFC method for Samsung Pay, rather than the HCE-based one.

A source close to the matter said that "Samsung is showing its willingness to showcase a local NFC technique. The method in question is likely to have the capability to store credit card information necessary for payments on Samsung Pay and to enable NFC communication between terminals at affiliated stores and mobile devices."

The source further noted that "In general, it is vulnerable to threats like memory hacking to store private information on Android apps. But Samsung is thinking about a method to protect credit card information one more time through its own security operating system KNOX."

Samsung's move can be interpreted as its intention to show off its own technical and market-dominant influence under the circumstances that the HCE method is expanding, led by the Google alliance.

The Korean tech giant plans to develop its own method, since there is still enough time to reveal its NFC technique for Samsung Pay. When Samsung Pay is launched in July through LoopPay, only a magnetic secure transmission (MST) enabled service will be available. The MST technology allows users to tap a mobile device near a credit card magnetic swipe terminal in order to make an automatic payment.

The NFC-based technique for Samsung Pay is scheduled to debut in the latter half of this year or next year.

About Making Comments on our Site: Patently Apple reserves the right to post, dismiss or edit any comments. Comments are reviewed daily from 4am to 7pm PST and sporadically over the weekend.