Last month, Samsung acquired LoopPay, a mobile payment technology, in order to build their own mobile payment service Samsung Pay. It is a much needed feature for company’s latest smartphones, as they are trying hard to compete with Apple’s iPhone 6 and iPhone 6 Plus which have shown great traction with Apple Pay.
According to Samsung, it is not just about mobile payment, it is about building a mobile wallet that is comprehensive in scope, without asking either merchants or consumers to change their behavior. Samsung is confident that their magnetic secure transmission (MST) technology is far more compatible than any other near-field communication (NFC) technology based mobile payment system (Apple Pay), which has very limited coverage in the U.S. due to the fact that it requires installation of additional device (NFC enabled devices) to the point-of-sale terminals.
What is Magnetic Secure Transmission?
When we swipe a card, the card reader receives a magnetic signal from the magnetic strip at the back of our card and sends the data for approval. LoopPay’s breakthrough technology sends the same magnetic signals wirelessly to merchant’s point-of-sale terminals right from your smartphone. All you need is to attach a slim and smart device to your smartphone. LoopPay uses smartphone cases and Key fobs to embed the device with smartphones. Samsung has worked relentlessly to convert it into a built-in feature with their upcoming Galaxy S6.
Theoretically, Magnetic Secure Transmission (MST) can be used at 90 percent of U.S. retailers that already use magnetic strip tech at their point-of-sale (POS) terminals. Moreover, retailers won’t have to worry about upgrading their POS terminals, as it is a fundamental requirement with Apple Pay. According to LoopPay, a lot more payment card issuers support its service than Apple Pay.
Is Samsung Pay secure?
It is one of the biggest concerns with mobile payment services, as we have already seen how potential Apple Pay competitor, Walmart’s CurrentC was hacked last year. Although, MST tech in Samsung Pay communicates with the same magnetic strip, POS readers have been using for years, the Samsung Pay app introduces a new step in the process, called “tokenization,” which enhances the overall security of your payment information.
In simple words, the Samsung Pay app embeds your payment information in a secure token that’s sent to the POS readers instead of your actual payment card data, so retailers (or any potential hacker) may never have direct access to that information. According to Samsung, your payment information is never stored on your device.
Mobile payment users are open to a lot of different threats as compared to a traditional credit or debit card user, but as far as sharing payment data with retailers is concerned, Samsung Pay should be more secure, no matter what you use MST or NFC.
Wrap Up
There is no question that Apple Pay has seen enormous growth; one million cards activated since its launch is not an ordinary achievement by any means. However, the fact remains that the tech still has only a small part of the coverage potential of credit cards. Samsung Pay is all about constructing a fast track to that 90 percent of old-school U.S. mag stripe credit card users. The plan is extensive with potential, but it will be really tested when we get our hands on a built-in MST enabled device.
