ST. PETERSBURG, Fla. — As Samsung Pay’s Sept. 28 launch date nears, industry analysts and credit unions alike have measured expectations due to uncertainty surrounding the platform it will use.
The fact that Verizon is still “evaluating” the platform for Samsung Pay is a real concern.
“We need a little more definition from Samsung because right now the strategy has not been defined,” said Cindy McGinness, manager of digital channels for PSCU. Representing more than 800 credit unions, McGinness added that the CUSO is excited to add Samsung Pay to its digital wallet line-up.
“At PSCU, we will leverage the processes we built for Apple Pay in our Samsung Pay rollout strategy and take advantage of the built-in efficiencies that come with using those processes,” she said.
Samsung Pay Overview
Earlier this month, Samsung announced that Samsung Pay will come preloaded on select Galaxy S6 Edge+ and Galaxy Note 5 devices. Galaxy S6 and S6 Edge devices that are already in the market will require a software upgrade to enable the payments capability.
Samsung Pay, which is currently in an invite–only beta testing user phase, uses near-field communication (NFC) connectivity and Magnetic Secure Transmission (a technology the company gained with its recent purchase of LoopPay). The latter allows its mobile payment system to be used with standard credit card machines. Apple Pay, conversely, only uses NFC connectivity.
“It’s better than Google Pay/Android Pay, but it’s not quite as good as Apple Pay,” said John Best, founder of Best Innovation Group. “The Samsung Pay device is limited. You need to buy a special case for the device or you have to buy the new Samsung phones. It was the same with Apple Pay; you were buying something in order to make it work.”
Currently, PSCU member-owner credit unions have had a 40% Apple Pay adoption rate. McGinness noted that PSCU has launched 102 credit unions with Apple Pay over the last 10 months, and have another 100 or so in its implementation queue.
“We expect Samsung Pay to gain more traction as far as transaction volumes are concerned because of the Magnetic Secure Transmission technology it supports,” said McGinness. “This technology will enable Samsung Pay-enabled devices to be used at any POS terminal that processes swiped cards. Basically, if a terminal is not NFC-equipped, Samsung Pay will work the same as a swiped card.”
The Verizon Quandary
In its beta phase, Samsung Pay is supported by the following carriers: AT&T, T-Mobile, Sprint and US Cellular. The glaring omission is Verizon. The company released the following statement via Twitter on Aug. 21: “Verizon is in the process of evaluating Samsung Pay and we’ll keep our customers updated on any news regarding the service.”
“We have no visibility into Verizon’s plans,” said McGinness. “We’re focused on enabling access at the credit union level, rather than at the consumer level, so our strategy would not be affected by whether Verizon plans to include support for Samsung Pay.”
At last year’s CUNA Technology Conference, Best was asked to present on the state of Apple Pay at that point, which had the industry buzzing. “On paper, no one should be at a five o’clock meeting in Las Vegas, but it was standing room only.” The organization asked him to present on Samsung Pay this year.
“If Verizon is not going to adopt Samsung Pay that would certainly be of interest to me and is among the topics I will certainly bring up during the presentation next month,” said Best.
A Credit Union Perspective
Among PSCU’s clients awaiting Samsung Pay adoption is the Alexandria, Va.-based PenFed Credit Union. With nearly 1,500 employees, 28 global branches and 1.3 million members, Vice President of Card Services Scott Young said that most members utilize the CUs mobile app and online banking tools.
“With the acquisition of Loop Pay, Samsung has positioned itself as a major player in the mobile payment ecosystem,” said Young. “We are working closely with PSCU and as a key strategic CU and excited about the launch.”
Young explained that PenFed CU began offering Visa Checkout in November 2012, Google Wallet in May 2013 and Apple Pay in March 2015. Samsung Pay will join these offerings in September.
“At PenFed, we proudly offer our membership competitive, market-leading payment products with innovation adoption being a very important component of our success,” said Young. “As the payments ecosystem evolves, it’s imperative that we, as a credit union evolve right along with it.”
