Until recently, talking about mobile payments without using words like "confusing" or "mess" meant essentially lying. A confounding mix of banks, carriers, manufacturers, point-of-sale systems, and all the competing interests behind those businesses served to make paying with your phone unreliable. Those problems are finally beginning to fade away thanks to wider adoption and simpler back-end systems, but they're not gone yet.
Even with Apple Pay, Google Wallet, and the soon-to-be-launched Android Pay, consumers can't be entirely sure that the little NFC icon they see at registers will guarantee that they can tap to pay. Samsung thinks it has a solution for that last problem, though, and predictably enough it's called "Samsung Pay."
It transmits to almost any credit card reader
To fix the problem of ensuring that more stores will take mobile payments, Samsung turned to a clever piece of technology that lets you pay at most any terminal where you can swipe a credit card. The trick comes thanks to a tiny coil that shoots out the same magnetic code that those readers normally get from your credit card. It's called "Magnetic Secure Transmission," or MST; it's built into the Galaxy S6, S6 Edge, S6 Edge+, and Note 5. As with other mobile wallets, Samsung Pay can also let you pay with NFC and it will store loyalty cards and gift cards.
Back in February, Samsung acquired LoopPay, which developed the MST technology, and it wasted little time building it into its phones. LoopPay's co-founder, Will Graylin, came over to Samsung with the acquisition. He contends that the threshold at which users will begin to really use mobile payments is 80 percent — that is, 80 percent or more of the stores you visit need to be able to let you pay from your phone. Since Samsung Pay can work with most credit card terminals, Samsung believes that it has a jump start on the competition.
Even though it's transmitting via a magnet, Samsung Pay seems to be set up to maintain security. It uses tokenization, which means that your actual credit card isn't sent, instead it uses a temporary one that Visa or Mastercard creates for you. It's also storing that information in a "trusted execution environment," which keeps it isolated from any app that might want to access it. Apple Pay also keeps that information in a secure element, but Samsung was quick to point out that Android Pay doesn't (though it is also tokenized, so the risk is lessened).
To use Samsung Pay, you simply swipe up from the bottom bezel of your phone. It works from the home screen and, in a clever twist, when the phone's screen is off. A credit card pops up and you unlock it with your fingerprint. At that point, you can either pay with NFC (as with Apple Pay or Android Pay) or hold it up near the spot where you swipe a credit card. Unlike Apple Pay or Android Pay, which can begin their payments process when they detect NFC, Samsung wants its system to be initiated by the user first. That's why it's using that swipe-up motion to get it started: it's easy and works even if the phone is off. (Samsung's executives weren't particularly concerned about any confusion that could stem from the fact that the same gesture is used to activate Google Now on other Android phones.)
Swipe up, unlock, tap, done
Samsung trotted a group of reporters over to a Dunkin' Donuts in New York to show it off and it worked so simply that there's not a whole lot to say — except that the swipe on the point-of-sale station was a little awkwardly placed. Swipe up, unlock, tap, done.
There are a few places where the MST technology won't work, namely any credit card reader that requires a physical trigger to activate the card read. That means that ATMs and gas pumps won't really work with Samsung Pay, but most stores will.
Samsung says that it's not taking a transaction fee from card issuers, but it is acting as a conduit for some of your transaction information. It sends that along to your phone so you can get receipts, but Graylin says that "we just pass it through" and that Samsung isn't collecting that data.
Samsung Pay is launching in Korea on August 20th and in the US on September 28th — though a software update which enables it will come sooner. It also says "select US users" will be able to take part in a beta test beginning on August 25th. The service is also planned for the UK, Spain, and China.
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