Samsung Pay Finally Arrives in the UK

Subscribe To Download This Insight

By Phil Sealy | 2Q 2017 | IN-4592

On May 16, 2017, Samsung officially announced the launch of Samsung Pay in the UK. As it stands, only a limited number of banks are supporting the platform, including Santander, Nationwide, and MBNA. HBSC, M&S Bank, American Express, and First Direct are expected to join soon.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.

 

Is Samsung Pay Late to the UK Scene?

NEWS


On May 16, 2017, Samsung officially announced the launch of Samsung Pay in the UK. As it stands, only a limited number of banks are supporting the platform, including Santander, Nationwide, and MBNA. HBSC, M&S Bank, American Express, and First Direct are expected to join soon.

In addition to the banks, Samsung struck a deal with Transport for London (TfL), enabling a user to specify a default credit or debit card for travel purposes. This will help reduce payment friction in instances where a user may have multiple cards stored on the Samsung Pay platform.

Samsung’s, arguably, late arrival to the UK’s mobile wallet competitive landscape and its ability to compete against somewhat more entrenched rivals initiated a lot of discussion among leading ecosystem players. This is due to Apple Pay and Android Pay having an already established presence—Apply Pay arriving about two years ago and Android Pay arriving almost a year ago.

However, Samsung remains unfazed and has already outlined its intentions to extend beyond the mobile phone and enable its payments platform on its Gear S3 range of smart watches in the UK.

No MST in the UK

IMPACT


Regarding open loop contactless payments, the UK is very advanced; not just in terms of retailer acceptance, but also in terms of transit acceptance. TfL paved the way for Apple, Android, and now Samsung Pay to access the transit market. Now, open loop acceptance in transit is expanding in the UK, with Reading Buses recently launching an open loop acceptance platform.

Samsung’s strategy is focused on reducing any remaining friction at the point of sale (POS), in this instance, striking a deal with TfL to reduce authentication latency. In other markets, Samsung relied upon its Magnetic Secure Transmission (MST) technology as a differentiator to reduce infrastructure friction, enabling contactless payments to be made at non-contactless POS terminals.  

However, this will not apply in the UK, as issuers are refusing to support its MST technology, instead opting to utilize the contactless NFC payments system with an accompanying embedded secure element.

One rumor is that Samsung’s delayed entry into the UK market was due partly to its MST technology and lack of support among UK issuers. Yet, despite the fact that Samsung may have lost a slight differentiation edge on the payments side, MST is more than a payments technology and service providers operating in different, but often adjacent, markets have the opportunity to leverage MST to bring the convenience and seamless experience of contactless to current mag-stripe solutions.

Samsung Faces Stiff Competition, but MST Could Open New Opportunities

COMMENTARY


Samsung’s real competitor is Android Pay. It will be interesting to see if, and how, Samsung is able to prize away established and new Android Pay users that have flagship Samsung devices in favor of the Samsung Pay platform.

Dislodging Android Pay users in this way will be necessary for Samsung to have an instant market impact, but these users will equally need a compelling reason to drop one mobile wallet and spend time to re-register cards and credentials to essentially achieve the same result, a contactless method of mobile payment.

Reducing any remaining friction points will certainly help Samsung’s cause, and its brand power will undoubtedly result in a good level of uptake; but, a more compelling driver may be required. This will likely take the form of added value in order to encourage a shift from Android Pay to Samsung Pay and ABI Research believes this is where Samsung’s MST technology fits in.

Although Samsung is unable to use its MST technology for payments in the UK, it doesn’t stop Samsung from utilizing it for other applications, as mag-stripe usage remains entrenched in a number of markets within the UK. Loyalty cards are one example and would prove a logical starting point from which Samsung can flesh out its payments platform while demonstrating the value of its MST technology. Rewards and loyalty systems proved to be a driver for the use of mobile wallets over traditional payment methods and it is an area Samsung will need to address in the UK to ensure mass uptake.

Many transit networks continue to operate mag-stripe tickets for access control and authentication, presenting the opportunity for Samsung’s presence in the transportation market to expand beyond London, where payment methods are often less cohesive. Via its MST technology, Samsung could enable frictionless and contactless payments using existing non-contactless infrastructure.

Additionally, access control and authentication via mag-stripe-based solutions are present in a number of other markets beyond transportation, with examples including entry to stadiums and events, membership identification, physical building access, etc., all of which present prime, largely untapped opportunities for Samsung to target with its MST technology.

Services

Companies Mentioned