Samsung is hoping to grab a slice of the lucrative mobile wallet sector with its own branded payment system for consumers, Samsung Pay, which launches in September in the United States and faces stiff competition from a slew of other bigwigs.

Samsung Pay, which was first revealed earlier this year, will launch ahead of competitor Android Pay’s planned fall 2015 rollout, thereby already pitting Samsung’s platform against a fellow Android-friendly system that will also be fighting for users. Regardless of the outcome, Samsung’s surprising move proves that mobile users should expect more payment platforms to become established sooner than later.

“Like Apple, Samsung is seeking to move beyond the role of device manufacturer and this is a smart move,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston. “By using the magnetic strip reader that almost every retailer has installed at their points of purchase, Samsung is trying to sidestep the slow NFC adoption problem that has plagued other mobile payment rollouts.

“Worldwide, Samsung has dominant market-share (24.6 percent in Q12015), nearly 10 percentage points above Apple. By turning all these phones into mobile wallets, Samsung can log, track and measure a new value element that is anchored in transactions, versus just the initial 1-time sale of the actual phone.”

Taking on competition
Samsung is ramping up to take on Apple and Google in the mobile payment sector with its own branded system that enables consumers to purchase items via contactless terminals.

They may also pay in bricks-and-mortar stores with their smartphones.

However, the company has one main differentiating point that it hopes will separate it from Apple Pay and Android Pay. Instead of relying on near field communication sensors to send payments to retailers’ point-of-sale systems, Samsung Pay is designed to tap magnetic secure transmission.

This technology will enable Android devices to communicate with magnetic strip readers located in credit card terminals.

To use the payment solution, consumers verify a mobile purchase with their fingerprint.

“With Apple, Samsung and Android in the mobile proximity space the customer side of the platform is covered, nearly all devices will have some form of mobile wallet embedded going forward,” said Thad Peterson, senior analyst at Aite Group, Atlantia. “All three use NFC to enable payments so it’s a further reinforcement of NFC as the de facto mobile proximity payment solution.

“Samsung also has the technology that enables the device to emulate a mag stripe card which will be a differentiator in the short term, but won’t have significant impact in three to five years.”

One advantage that Samsung Pay might grab is a faster market rollout than its competitor Android Pay. Samsung’s platform is expected to launch on September 28, while the Android system’s fall rollout date has not been confirmed.

Customers who purchase the Galaxy S6 Edge and Galaxy Note5 will find Samsung Pay preloaded on the devices.

The technology company’s current credit card partners include MasterCard, Visa, Discover and American Express with banks such as Chase, U.S. Bank and Bank of America also joining the fray.

Gathering merchant support
Samsung Pay’s next step will likely be gathering support from merchants and retailers who accept mobile payments. The fact that the platform does not require NFC readers could potentially boost its adoption rate in the market.

Nevertheless, experts remain divided on the effectiveness of Samsung’s decision to introduce this service.

“It’s a differentiator and it positions them directly against Apple and Apple Pay, but I’m not certain that it’s going to generate a significant body of customers and/or usage,” Mr. Peterson said. “It will boil down to the user experience and the difference between Samsung’s UX and Android Pay.

“They will be the only mobile proximity payment platform that isn’t native to an OS and that puts them at a significant disadvantage when compared with Apple and Android.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York