Samsung announced the Galaxy 6 and Loop Pay payments on March 1st. The new Loop Pay solution uses Magnetic Secure Transmission (MST) and represents a major improvement over the current Loop Pay FOB which Mercator analyzed in the blog entitled “Several Challenges Confront Samsung in Gaining Momentum with LoopPay.” The FOB was not only shrunk to fit inside the new Galaxy 6 it was also updated to support both tokenization via the mag head and full NFC support. Perhaps most interesting is the fact the device will detect if NFC is available and use that as the preferred payment mechanism and only default to the mag head if NFC is unavailable.
As a result the Samsung device will be capable of supporting 90% of merchant locations including all merchants that support NFC, a clear and large advantage over Google Wallet and Apple Pay. But that may be insufficient for market success. Continue Reading Full Blog News Item by Tim Sloane, VP of Payment Innovation, Mercator Advisory Group.
We begin this analysis by reviewing and updating the analysis that was conducted in the earlier blog entitled “Several Challenges Confront Samsung in Gaining Momentum with LoopPay” that was predicated on the Loop Pay FOB feature set. In that blog we stated:
“Apple clearly achieved a marketing coup when banks all took out ads communicating the benefits of Apple Pay, not only to their customers but to the larger market as well. It is unclear what business arrangements Samsung will put in place (if any) to encourage bank participation, much less banks’ advertising investment. In theory LoopPay enables Samsung to ignore the banks, but if Samsung does that, then it is likely to also lose banks’ marketing participation. This problem is a Samsung business and contractual consideration that only Samsung can answer, but failing to address it would be a major failure on Samsung’s part.”
Marketing and consumer attention indeed remain the key issues that may prevent broad adoption of what is clearly a better payment product for consumers. Google has achieved a partnership with mobile carriers through the acquisition of Softcard and the carriers in turn have agreed to preload Google Wallet onto compatible devices. It is rumored that Samsung has annoyed the mobile carriers by deploying a solution that bypasses carrier control of the Secure Element and has failed to provide any incentives for bank participation. Marketing and gaining consumer awareness of the Loop Pay solution may be the largest stumbling block to success. Mercator is also unaware of any announced date for the initial provisioning of Loop Pay. As will be discussed later the Loop Pay solution does not utilize the Secure Element and so may need to go through a protracted certification process.
The second issue that was discussed was the question of how Samsung would monetize Loop Pay. It has been rumored that banks have refused to offer any basis points on transactions back to Google or Samsung, so if a monetization plan is possible, it will likely be through consumer adoption of new features within the wallet, not from the banks or networks……Continued