Market Insight

Samsung Pay’s global expansion strategy leads to 100 million transactions

August 31, 2016

Ruomeng Wang Ruomeng Wang Research & Analysis Manager, Security - Fintech & Blockchain

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Samsung’s Samsung Pay mobile payments service has served more than  100 million global transactions since its launch in 2015, as well as recording more than 4 million membership and loyalty cards registered in the US and South Korea.

Samsung Pay is available in eight markets: South Korea, the US, China, Spain, Singapore, Australia, Puerto Rico, and Brazil. It is compatible with Samsung Galaxy S6, Galaxy S6 edge, Galaxy S6 edge+, Galaxy S6 active, Galaxy Note 5, Galaxy A5, Galaxy A7, Galaxy A9, Galaxy S7, Galaxy S7 edge, Galaxy Note 7.

Our analysis:

Samsung Pay first launched in South Korea in August 2015, and in the following year it has been made available in a further seven countries – taking the total availability to eight countries by August 2016. Although Samsung Pay launched a year later than Apple Pay, it is catching up with Apple Pay in terms of global market expansion. Compared to Apple Pay and Android Pay, Samsung Pay is the most actively expanding mobile payments service in 2016, adding six new markets this year. In contrast, Apple Pay has added five markets and Android launched in three markets in 2016.

Thanks to the accelerated market expansion, Samsung Pay has achieved 100 million transactions worldwide. Samsung Pay’s global expansion strategy, partnership ecosystem – it has partnered with companies such as Alibaba in China, and technology innovation contribute to its success. 

Market expansion is part of the competition

Apple Pay and Samsung Pay are handset based mobile payments services and compatible with different smartphones, so there is no direct competition between them. However, Android Pay is available on Samsung devices, bringing intense competition between Samsung Pay and Android Pay.  Therefore, Samsung Pay needs to be strategic when considering launching in new markets in terms of location, timing, and partnerships.

This is illustrated by Samsung Pay’s launch in Brazil, coinciding with the 2016 Rio Olympic Games. The launch received support from major banks including Banco do Brasil, Brasil Pré-Pagos, Caixa, Porto Seguro, and Santander. This marks Samsung Pay’s first entry into the South America market ahead of Apple Pay and Android Pay. As Samsung is one of the sponsors for the Rio Olympic Games, it offers more opportunities for Samsung Pay to increase the adoption among users in Brazil and also tourists from all over the world. 

Building a comprehensive partnership ecosystem is crucial

Building strong partnerships is crucial for mobile payments services when launching in a new market. Samsung Pay is not only developing partnerships with banks, but also operating an open model for developing partnerships. When Samsung Pay launched in Singapore, it partnered with 40 preferred merchants covering supermarkets, healthcare and beauty outlets, fashion, electronics and furnishing stores, travel and entertainment. The scale of service availability improves the first-time user experience, which is a key driver in maximising user retention.

For Samsung Pay’s launch in China it partnered with Alipay, one of the most dominant mobile payment services. Alipay allows users to pay with QR codes, has 174 financial partners and claims 427 million monthly mobile users. The partnership allows Samsung Pay to take advantage of Alipay’s foundations in China. From a technological perspective, the partnership also allows Samsung Pay to incorporate QR codes as an additional payment method to its services.

Technology innovation increases flexibility

Samsung Pay is developed for both contactless and non-contactless payments. The Magnetic Secure Transmission (MST) allows users to use bank cards with only magnetic stripes and merchants with payments terminals that have not yet updated to contactless. This also provides a convenient service for users to add loyalty and gifts cards to Samsung Pay, as most of them are processed by MST. Samsung Pay has innovated iris scan for payments in August 2016, this offers Samsung Pay users one more choice to make payments.

More device support is needed for widespread adoption

So far Samsung has generally focused on bringing its payment service to recent largely high-end devices. This will help it differentiate its smartphones, but limits the number of customers that will be able to use the service – which put off some potential partners. 

Research by Market
Mobile & Telecom
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