Samsung Pay is coming to Australia. Some time this year, we'll see yet another contactless payment system that lets you use your phone to buy groceries or shop in stores. Samsung's attempt, though, seems to be the most versatile and powerful yet for customers, and potentially the most trouble-free for banks to implement.
The payment infrastructure in Australia is markedly different to Samsung Pay's launch market of the US. Where the US is still heavily reliant on MST — Magnetic Secure Transmission, the passive magnetic strips on cards — and has small penetration of NFC card readers, Australia's chip-and-PIN systems and the launch of VISA PayWave and Mastercard PayPass means the country is primed for payments via smartphone. Even smaller institutions in Australia like Credit Union Australia often already have contactless payment apps for Android.
That means the appeal of Sammsung Pay is not purely in replacing the average RFID/NFC chip-and-PIN-enabled credit or debit card from Australia's banks. There is a convenience factor — it's quicker — but the fact that it's easy, not just for customers but for card providers like Cuscal or individual banks to implement, with no costs beyond app development and the ongoing service expense of supporting another payment method in a crowded marketplace.
Using Samsung Pay is straightforward. From a locked, powered-off screen, swiping up from a Samsung phone's lock button across the lower half of the screen launches Samsung Pay within half a second, displaying a carousel of registered cards. Tap your (registered) fingerprint on the physical home button, and the NFC chip will activate, opening the phone to communicate with a NFC card reader and submit a payment for the net 15 seconds.
Samsung went to pains to say that customers' data is not harvested by Samsung, and any payment data that is captured is only limited — like transaction records — and only then after specific agreements with individual banks. American Express, for example, shares full transaction records with Samsung Pay to make it easier for customers to monitor any payments made from their accounts. Others share only transactions made through Samsung Pay.
Thomas Ko, Samsung's global vice president of mobile payments, told Gizmodo that the chief appeal of Samsung Pay to banks and card providers was that the company didn't take a cut of payments made through the system — it was acting purely as a middleman in creating its Galaxy Note 5 and other phones as payment hardware, and that the sovereignty of the data always remains with the banks with Samsung being merely a custodian.
Prasad Gokhale, Samsung Australia's vice president of IT and mobile, said the company is working locally with banks in the lead-up to the local launch, and already has more than one confirmed as supporting Pay, with more in talks. The company is vehement about how seamless it wants to be in its integration of Pay; it's willing to work with banks' existing apps, whether they're simply for account management and balance checking, or whether they already offer NFC payment options.
The usability of Samsung Pay, on a compatible Samsung smartphone, needs software and hardware alike to be free from hacking or interference. Samsung Pay requires the company's secure off-SoC Knox hardware, and currently the Galaxy Note 5 is one of few phones with official support for the service, alongside the mid-range Galaxy A3, A5 and A7. Ko told Gizmodo that the company was investigating expanding the service to the Galaxy S6 in Australia, where it has enjoyed excellent sales and has the necessary hardware but is not officially supported yet.
One of the major parts of Samsung's necessary deal with banks is in setting up a system whereby a single-use authentication token is created when Samsung Pay is launched and used. That token is encrypted, and many banks also use time-based expiry to further protect each payment against potential hijacking. It's not impossible for a dedicated individual to 'hack' a Samsung Pay device — nothing is impossible — but the reward is extremely limited in scope if only a single payment can be made.
When it launches in Australia, Samsung Pay should present strong competition to Apple Pay, as well as the less system-level integrated device-agnostic Android NFC apps of Australia's major banks. Whether it properly takes off remains to be seen, and will depend primarily on how many banks and card providers Samsung can get on board before and in the early stages of the launch, and whetehr the company can convince consumers to ditch their cards and use a phone instead.
Campbell Simpson travelled to CES 2016 as a guest of Samsung.