Samsung rolled out Samsung Pay in India. At launch, Samsung Pay is compatible with Galaxy S7 and S7 edge, Galaxy Note 5, Galaxy S6 Edge+, Galaxy A5 and Galaxy A7 smartphones.
Samsung has partnered with MasterCard and Visa, and banks including Axis, HDFC, ICICI, SBI, and Standard Chartered.
Samsung has been focusing on Samsung Pay’s expansion in Asia-Pacific, Europe and the Americas. India is one of the key markets in APAC as it has large population and the second largest (behind China) smartphone installed base, although penetration is relatively low. There were 319m smartphones in use in India at the end of 2016 (24 per 100 people) compared with 1.1bn in China (78 per 100 people). The Indian market will grow to more than 877m smartphones in use by 2020. Samsung’s smartphone shipments market share in India was over 40% in Q3 2016. The high smartphone shipments number indicates there will be more addressable devices ready for Samsung Pay. Samsung Pay’s launch should help Samsung’s smartphone business in India as the launch comes ahead of Apple and Google, which have not yet expanded Apple Pay and Android Pay into India.
Mobile payment market conditions in India are improving
Samsung Pay’s launch follows the Indian government’s policy launched in late 2016 aimed at moving towards a cashless society. The government's promotion of demonetisation (initially higher value cash denominations are being removed from circulation) means it is a good time for Samsung Pay to enter the Indian market. Normally, regulations and financial infrastructure are two of the main challenges for mobile money services to launch in a new market. However, the government’s support for mobile money services will provide a positive environment for Samsung Pay to develop partnerships with banks and merchants, and accelerate user acquisition.
Samsung Pay to face challenges and strong competitions in India
The launch of Samsung Pay in India has followed a similar strategy as when it launched in China: partnering with local mobile payments players. The China launch saw Samsung Pay partner with Alibaba’s affiliate Alipay in China; for the launch in India it has partnered with Paytm. The partnership allows Samsung to leverage Paytm’s 200 million mobile wallet users. For Paytm, the device-based nature of Samsung Pay integration should provide a quicker and better in-store user experience.
Samsung Pay’s main payment technologies are magnetic secure transmission (MST) and NFC. Paytm’s large user base and QR code based payments service should help Samsung gain both user and merchant support. As smaller merchants in India may not support Samsung’s NFC-based mobile payments service, so partnering to enable QR codes ensures wider reach. Visa and Mastercard have also been promoting QR code based mobile payments services in India, through mVisa and Masterpass respectively, which indicates more competitions for Samsung Pay. QR code-based mobile payments will be an important payments option in India during the process of transforming to the cashless economy. Samsung needs to further differentiate its mobile payments service to compete in India.
The relatively limited device model support presents another challenge for Samsung Pay in India. As Samsung Pay is compatible with mostly high-end models, only a subset of Samsung users will have access to Samsung Pay. Samsung has stated that it aims to bring Samsung Pay to its more mid-range devices, a move that will be vital to ensure it reaches a large audience in India despite its strong market share.
The promotion of a cashless economy should help attract more local and international players to join the Indian mobile payments market, thereby increasing competition. Local operators such as Bharti, Vodafone Essar and Idea Cellular have already launched their mobile money services – but these are digital wallet services rather than handset based NFC and QR code services and with limited access for in-store transactions. With a large choice of mobile payments services, user experience, widespread merchant and device support, will be the key to competing and driving user adoption.