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Who Will Win In a 3-Way Mobile-Payment Bout?

Samsung set to roll out its pay service

NEW YORK – The Samsung Pay mobile-payment service, unveiled in February, will launch in the U.S. on Sept. 28 to challenge Apple Pay, launched in 2014, and compete with Google’s planned Android Pay service, expected to launch by the end of the year.

Samsung boasts of winning the three-way matchup because Samsung Pay differs from the other two mobilepayment technologies in that it uses both MST (Magnetic Secure Transmission) technology and NFC (Near Field Communication). MST technology works with existing magnetic card readers that are used for swiping cards.

As a result, Samsung Pay can be accepted at more than 10 million locations in the U.S. compared to Apple Pay’s 1 million locations, Samsung said. Samsung Pay payments will be “accepted virtually anywhere,” said InJong Rhee, executive VP of Samsung Electronics and global head of Samsung Pay, during a launch event here.

When mobile payments aren’t accepted almost everywhere, it “creates a mental block” in consumers, dissuading them from adopting the technology, Rhee also said during the event.

Samsung also promoted its solution as the first mobilepayments solution available with ability to accept store cards, although Samsung’s exclusive will be short-lived. That’s because Samsung Pay rolls out first in Korea on Aug. 20, just weeks before Apple extends Apple Pay to store cards via the launch of the iOS 9 mobile OS.

Challenges: Though Samsung’ MST technology is a major differentiator, the company’s payment platform faces challenges, said IHS Technology. For one thing, as retailers migrate to EMV chip-and-pin POS terminals, “the advantage of MST will gradually disappear, and Samsung needs to offer better solutions to compete with all other payment services using NFC terminals,” IHS said.

The competition will also be stiff, IHS said. Samsung “pushed back its initial launch from July to September while Apple Pay has established a lead in the U.S. and Google is revamping Google Wallet to Android Pay.”

Samsung Pay’s co-existence with Android Pay, the research company added, “is likely to create frictions in the Android ecosystem as consumers could be confused by the two payment options.”

Phone compatibility: Samsung Pay will be available out of the box with the Galaxy S6 Edge+ and Note 5 phablets on Aug. 21. A free software upgrade rolling out in mid August will bring Samsung Pay to current owners of the Galaxy S6 and S6 Edge.

Samsung Pay has the backing of American Express, Discover, Master Card, Visa and major U.S. banks such as Chase, Citi, Bank of America, and U.S. Bank. It is also backed by financial institutions such as Synchrony Financial, which calls itself the largest provider of private-label credit cards in the U.S. based on 2014 purchase volume.

Process: With Samsung Pay, consumers will swipe up their Samsung phone’s screen, scan their fingerprint on the display, and make a payment, Samsung said. The service uses tokenization, Samsung hardware-based Knox security, and fingerprint authentication to protect transactions, the company said. No credit-card or personal information is personal information is exchanged during a transaction, the company said.