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Samsung Pay: A payment service with immense opportunity, but challenges exist

Samsung Pay aims to change the conventional way of making payments, but will it succeed?

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Demonetization will be remembered as one of the most important economic milestones for India, perhaps equivalent to the nationalization of banks in 1969 and liberalization of the Indian economy in 1991. Just like the liberalization, demonetization has helped open new windows of opportunity for the companies along with a big impact on the day-to-day life of the people. Even as Indians are transitioning towards a cashless economy, companies that deal with digital payments like Paytm are reaping the benefits. With the advent of BHIM and a slew of UPI apps, the digital payment and its adoption are growing at a fast pace. Latest to tap on this growing trend is Samsung, which believes can make a difference with its new contactless payment solution, Samsung Pay.

Samsung Pay should not be confused with other mobile wallet apps. Instead, it focuses on an existing ecosystem of debit/credit payments at PoS terminals and also includes support for India’s Paytm and UPI apps. At the launch event yesterday, Samsung stressed it was a historic day for India and was just shy of calling the service ‘revolutionary’. The presence of NITI Aayog CEO Amitabh Kant at the event also indicated the service already has blessings of the government. Amitabh Kant even went on to say that Samsung Pay was a killer app. Well, whether it will be a killer app, time shall tell. I have no qualms about Samsung’s ability to promote and market the service enough for sensitizing users. But in my opinion, Samsung Pay, in its current version, won’t become mainstream too soon. Before I elaborate on why I think so, I would like to talk about what works in Samsung’s favor at the moment.

What works for Samsung

If you have followed Samsung for the last couple of years, Samsung Pay has been around for quite some time and competes with Apple’s Apple Pay service. India, despite being its prime market, got the service almost two and half years later of its debut. It is no brainer why Samsung brought the service in India now.

Belonging to a middle-class family, I can tell how difficult the initial dayswere post demonetization. From standing for hours in front of the bank and ATM to making people around me aware about Paytm, I and perhaps a lot of my countrymen had to suffer a big time. But towards the December 30 deadline, there were smaller queues in front the banks whereas micro merchants, likePanwaari in front of my office, started accepting Paytm. Even a small vegetable vendor in Patna accepted Paytm. The vendor with a pride showed off his smartphone, said, “bhaiyaa market mesirf hum Paytmletehain. (only we acceptPaytm in this entire market).” There was a drastic and quick change in our lifestyle, and evidently, we quickly adapted to the new regime. ALSO READ: Samsung Pay: All you need to know about the latest global payment system to enter India

For Samsung, the hard work of educating the customer and creating a market for digital payments has already been done. Just don’t forget Paytm and Mobikwik and solutions like IMPS-based online transfer or mobile banking existed in India for quite some years. I would like to believe people who know about Paytm or UPI app, can easily understand Samsung Pay. Had Samsung launched the service immediately after the demonetization, I would have a different take on this. At this moment, it appears Samsung wants and perhaps will even succeed in riding on this trend.

Another thing that works for Samsung is that it does not ask merchants to buy new hardware, say NFC-enabled PoS machines, to accept payments through Samsung Pay. This, in my opinion, is the USP of Samsung Pay and sets apart from existing NFC-based payment solutions and even an early mover advantage over Apple. Companies like Paytm have to invest heavily in keeping merchants up to date with their new changes and even before that they have to explain them why should they be accepting Paytm after all. For Samsung, it has to just focus on end-users, and which kind of is its forte as well.

With its challenges too

Now, coming to the challenges for Samsung. No matter how much air is being blown, the fact remains that Samsung Pay works on a just handful of Samsung devices. And the starting price of these devices is Rs 20,000, which is generally considered as upper tier of the mid-range category. It supports Galaxy S7 edge, Galaxy S7, Galaxy Note 5, Galaxy S6 edge+, Galaxy A5 (2016), Galaxy A7 (2016), Galaxy A5 (2017) and Galaxy A7 (2017). Though there are rumors that Samsung Pay will be rolled out to J-series smartphones, but Samsung hasn’t confirmed that as yet.

The majority of Indian users are using smartphones, around Rs 10,000 and perhaps even lower. Unless Samsung launches the feature on its On series of smartphones, it will be difficult for it to scale it up further. And then, it’s just exclusive to Samsung. The company leads the Indian market but rivals like Xiaomi and Lenovo are catching up fast. At some point, Samsung should consider making Samsung Pay a standalone application for compatibility with a wide range of smartphones available in the market. ALSO READ: How to send and receive money with UPI on iPhone and feature phones without BHIM app

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As I mentioned earlier, Samsung Pay currently is restricted to physical PoS terminals while the Korean version of the app lets you make online payments as well. Samsung says it will be expanding the feature to Indian users in the near future. But at the moment, if you think of a use case, here’s how it is going to read like — I have a compatible Samsung smartphone. I go to a restaurant and choose to pay with Samsung Pay rather using my debit card. I might carry a debit card if I am going to a restaurant or places where I have to make payments at a PoS terminal. Samsung Pay might appear fancy at one point, but I would simply swipe the card and get over with it. To convince customers like me that I don’t need to carry debit/credit cards all the time, will take a while. And then my credit/debit card will never run out of the battery. Yes, it might get stolen, but the first thing I would do is get the freaking card blocked.

Concluding, Samsung Pay at the moment is a nifty addition to the existing digital payments ecosystem. Without a ‘universal’ approach, I really don’t see Samsung Pay becoming mainstream as yet. But then it has just taken birth in India, let’s wait and watch how it matures.

  • Published Date: March 23, 2017 1:07 PM IST