Samsung Pay enters UK mobile payments market
Samsung Pay has launched in the UK, offering contactless mobile payments nearly two years after Apple Pay and a year after Android Pay. The system is compatible with Samsung Galaxy S smartphones, and makes up the foundations of the firm’s services strategy this year, along with personal assistant Bixby, Samsung Connect and Samsung Health. However, Samsung Pay must convince users to switch from Android Pay, which has been available on Android smartphones - including those made by Samsung - since May 2016, and already has third-party support in various apps. 
Samsung has finally launched its contactless mobile payment solution in the UK, almost two years after its chief rival Apple Pay rolled out, and a full year after Android Pay.

The new contactless payment system allows users of recent Samsung Galaxy S smartphones to pay for goods and services by tapping their handsets on contactless terminals, and pay for travel on Transport for London’s network of tube, train and bus services.

While Samsung Pay was one of the first mobile payment systems to market in South Korea and other countries, it is late to the game in the UK. Android Pay has been available on Samsung and other manufacturers’ Android smartphones since May 2016 in the UK, and has third-party app support with payments inside on-demand food delivery apps, for example.

That means Samsung has a lot of ground to make up, according to Ben Wood, head of research for the analysts CCS Insight. Wood said: “Samsung Pay’s primary competition is Android Pay and Samsung will need to offer some very attractive incentives to users if it wants to compete. Even more of a challenge will be getting existing Android Pay users to start using Samsung Pay – it is hard to see why someone would want to switch at present.”

It will be crucial for Samsung to convince both new and existing Android Pay users to jump to Samsung Pay, as the firm struggles to break free from being seen as solely a device vendor.

Kyle Brown, Samsung’s head of technology launch management, said: “Samsung Pay is one of our key foundations for our services strategy for 2017, along with Bixby, Samsung Connect and Samsung Health.”

Samsung is attempting to leverage the company’s secure smartphone system called Knox, which it says is the most secure mobile security platform available and is used by governments including the UK. It is using Knox as a way to convince users that their credit card details required for the mobile payments are secure, a similar narrative to that used by Apple when it launched Apple Pay in the UK in July 2015.

Wood said: “Samsung is determined to get consumers to think of it as more than just a company that makes devices. Samsung Pay is just one of several initiatives where it is trying to add value to its products while establishing an ongoing relationship with its customers over the lifetime of a device.”

Samsung will offer iris scanning as well as fingerprint scanning to authenticate payments on the Galaxy S8. Photograph: Samsung

Unlike its rivals Apple and Google, Samsung does not have many value-added services that generate revenue after a user has bought a device. Google’s Play Store sells apps, games, music, books and videos on Samsung and other Android devices, and generates revenue from searches, Android Pay, and other Google apps activities. Apple has full control over the iPhone’s shops and services, from the App Store, iTunes Store, Apple Pay and various iCloud services, collecting service fees or a cut of sales from each.

Google’s services, being available on most of the Android devices sold in the west, do not lock users into any one particular brand of smartphone but make it more difficult to leave Android for Apple’s iOS or Microsoft’s Windows phones. For Apple its services increase the inertia for users making it more difficult to switch platforms, while generating meaningful revenue from existing iPhone users, and it is this relationship between smartphones, services and users Samsung is looking to replicate.

Samsung Pay in the UK has a few key differences between the same service in other territories and Android Pay. For one, it has a deal with TfL that means a credit or debit card can be designated the “travel” card, if you have multiple cards stored, not requiring the phone screen to be on or a particular card to be selected each time Samsung Pay is used for London travel. For Android Pay, the screen just needs to be on, but for Apple Pay on an iPhone the payment must always be authenticated, which can cause queues at the TfL gates.

Other purchases through Samsung Pay have to be authenticated before being made with a fingerprint, iris scan or pin, while Samsung Pay in the UK is only based on the contactless payment system and cannot use the magnetic stripe as it can in the US and other places.

The availability of Samsung Pay, plus the expected marketing drive by the South Korean firm, could help the adoption of mobile payments, despite it being limited to Galaxy S8, S7 and S6 variants and only with Visa and Mastercard cards provided by Santander, Nationwide and MBNA at launch. Samsung said HSBC, first direct, M&S bank and AmericanExpress, as well as its A series of smartphones and Gear smartwatches, would be joining Samsung Pay soon.

Mobile payments have found more success in metropolitan areas, particularly for low-cost items. Photograph: Samsung

Wood said: “Mobile payments have taken off more slowly than expected, but there are encouraging signs of progress. In its latest earnings call Apple revealed that Apple Pay transactions had grown 450% year on year and it has previously stated that one million users have signed up on a weekly basis.

“The arrival of Samsung Pay gives consumers even more choice on how they can make payments. The UK is already a strong market when it comes to contactless payments and the extensive payment infrastructure means that it is a strategic market for any company looking to launch mobile payments”

Mobile payments have found more success in metropolitan areas in the UK, with London a hotspot. Wood said: “There have already been many millions of transactions on the TfL network. As consumers become more aware of being able to pay with their smartphones the number of transactions will grow – particularly for low-cost items such as buying a cup of coffee.”