The successful launch of Samsung Pay in South Korea dwarfed expectations, as every day brings nearly 25,000 new users and transactions above $620,000.
Samsung Pay is a technology that permits customers to pay for their purchases by placing their smartphones on or near a point-of-sale device.
Research firm IDC estimates that the mobile payment market will jump the $1 trillion threshold in 2017. The competition will be fierce, as Apple Inc., Huawei Technologies Co. or Xiaomi Inc. are keen on having a slice of it.
"The way to protect pricing power is to offer a service that users can't get elsewhere," says Injong Rhee, Samsung executive vice president.
The focus on cheaper phones that support the service is high, as the slice of market share for Samsung's smartphones dropped by 4.3 percent prior to June. Although the Korean producer makes itself a relevant competitor in the race for mobile payments, the simple presence does not imply an increase in sales.
Some information suggests the contrary, however. In the three days after the launch of the service, sales in South Korea doubled for the Galaxy Note 5 and Galaxy S6 Edge models, both of which support Samsung Pay.
"Samsung Pay is a necessary step in the right direction but it doesn't guarantee increased sales of smartphones for the company," says Shiv Putcha, IDC analyst. Other voices also expressed caution when analyzing the competitiveness of Samsung Pay when faced with Apple Pay or Android Pay.
International credit card providers, such as MasterCard and Visa, have already signed agreements of use. One important advantage of Samsung Pay is the compatibility with existing magnetic stripe card readers, whereas Apple Pay asks retailers to install hardware that is iOS specific.
The official date for the U.S. launch is Sept. 28, and the service is scheduled to be implemented in China and European countries, as well as Latin America. Rhee is interested in expanding the service even more and is looking into the possibility of making online payments as well.
"We're looking at every company that could give some new element of differentiation for our devices," Rhee declares.
