TAMPA, Fla.—Samsung Pay’s entrance into mobile payments bodes well for issuers, say analysts, who believe the digital wallet will drive down or eliminate Apple Pay’s transaction fee issuers are now paying.
Tom Davis, CSCU
Sources also contend that the Apple Pay rival does not control the issuer’s card branding, as is the case with Apple.
The good thing about Samsung Pay, which employs LoopPay, a “magnetic secure transmission" that "spoofs" a traditional card swipe with magnetic fields when a user holds their device near a payment terminal, is the issuer does not pay a “toll, like they do with Apple Pay,” said Tom Davis, senior vice president, emerging payment technology at CSCU,, noting that Samsung Pay simply rides mag-stripe rails.
“So at the end of the day there really is no disruption in the payment process with LoopPay,” said Davis, pointing out issuers’ need for card branding. “You basically load your card into LoopPay, and it is positioned just like a card you would have in your leather wallet.”
But with many CUs rushing now to enroll with Apple Pay, how do they address Samsung Pay? Davis reiterated a strategy consistently shared by payments experts: Credit unions must pay attention to the membership and address all mobile payment options members want.
“We always state that credit unions need to support all the means with which members want to pay,” said Davis.
With Samsung Pay, added Davis, issuers don’t have to wait in line to go live, like they do with Apple Pay. “Members just load their card into LoopPay and they are ready to go.”
David Hall, PSCU
Davis expects Samsung’s entrance into mobile payments will begin to force Apple Pay to reduce and eventually eliminate its current 15-basis-point transaction fee.
“No doubt about it that from an issuer’s perspective competition is good,” said Davis. “Samsung Pay is good news for issuers—it gives consumers more choice.”
Davis also noted that credit unions should be skeptical of reports that indicate Apple Pay as being “wildly successful” now. “All the press about Apple’s success . . . when there has been no previous success in mobile payments, any success is considered wildly successful. But when you look at payments transactions overall, Apple Pay is still a very small number.”
As with any new mobile wallet, member education is crucial, said David Hall, SVP of vendor alliance partnerships at PSCU in St. Petersburg, Fla.
“The same top-of-wallet strategies that occur in the physical payments world occur in the digital world,” said Hall. “So make sure you have educated your members on how to use the credit union’s card over all other cards, no matter what the wallet is.