Dive Brief:

• Samsung Electronics and Alibaba Group-backed Ant Financial, the Chinese company behind the Alipay online payment service, have reached a deal that enables consumers to use their Alipay accounts to make mobile payments via the smartphone maker's Samsung Pay application.

• Alipay has 450 million active registered users in China, far outpacing rival mobile wallet solutions.

• Apple is reportedly working on a similar deal with Alipay, according to Reuters.

Dive Insight:

Samsung has been working to expand the reach of Samsung Pay after entering the mobile payments market last year. This deal could help accelerate Samsung’s efforts in China, with the potential to boost sales of its smartphones as well as mobile wallet usage. That could spell trouble for Apple, which reported its first decline in quarterly revenue in 13 years last month, largely on disappointing results in China. 

Samsung Pay uses both Near Field Communication and Magnetic Secure Transmission technologies so that it can be used in secure transactions for new EMV chip and NFC terminals as well as traditional, magnetic strip terminals, which sharply increases the number of POS systems that can accept it. Samsung says the Samsung Pay wallet works faster than using a chip-enabled credit or debit card, and claims it’s safer than swiping a mag-stripe card because tokenization protects against copy and reuse, even at mag-stripe-only terminals.

Samsung Pay has struggled to gain traction with U.S. retailers. Two-thirds of merchants interested in digital payment solutions want Apple Pay, according to a recent survey of payment processing vendors from Piper Jaffray. Android Pay and Google Wallet came in a distant second with 18% of retailers that have or asked about digital systems, followed by PayPal (8%) and Samsung Pay (7%).

Projections say that 148 million people worldwide will use their smartphones to pay retailers this year, up 64% from 2015’s 90 million.