In the context of demonetisation and a cashless economy digital payments systems are very important in India. Today, as Samsung prepares the launch its cashless payments platform – Samsung Pay, the entire focus of the market has shifted towards a cashless economy which has given a massive fillip to mobile wallets like Paytm, Freecharge and even the government’s own BHIM app. Samsung Pay, however is a different animal. It is a hardware element embedded in Samsung’s phones which allow the phone to act like a credit or debit card; not too dissimilar from Apple Pay which Apple had introduced to the world a couple of years ago with the iPhone 6 for the first time. Apple Pay, however, is not in India, which gives Samsung’s platform a first movers advantage in India. Let us demystify what Samsung Pay means to the market in India and how it works.
What is it?
Essentially it is a hardware feature in select Samsung phones which allows the user to wave their phone around a cash register to make payments. It is an alternative to credit or debit cards and cash.
How does it work?
Samsung uses a combination of near fields communication (NFC) and magnetic secure transmission (MST). NFC creates a high frequency wireless network between the phone and the terminal. MST instead creates a dynamic magnetic field between the device and the card machine.
For NFC based transactions one can select and authenticate the transaction through biometrics provided by the fingerprint sensor or a 4 digit PIN. This works with select point of sale (POS) machines which support NFC. In the case the machine doesn’t support NFC technology, MST is a fallback option that Samsung has added which mimics the way a credit card would interact with a POS terminal. This is one feature that’s not available on Apple Pay and one the reasons Apple will take far longer to deploy its service in India.
What phones support it?
Samsung Pay is restricted to a handful of Samsung smartphones as of now. Currently the Samsung Galaxy Note 5, Samsung Galaxy S7, Samsung Galaxy S7 Edge, Samsung Galaxy S6 Edge+, Samsung Galaxy A7 (2016 and 2017) and Samsung Galaxy A5 (2016 and 2017) are supported. In the coming weeks we can expect Samsung’s next flagship phone — the Galaxy S8 to be part of the lineup. It is slated to be globally announced on March 29 at an event in New York and later launched in markets like India by April.
What banks support Samsung Pay?
At launch Samsung has partnered with Axis Bank, HDFC Bank, ICICI Bank and Standard Chartered Bank. Credit and Debit cards of these banks are supported in the Samsung Pay app. For SBI, only credit card support has been added, while Citibank will be added soon. For Standard Charted users, Samsung is also providing a cash back there will be an Rs 500 cash back for the first 500 transactions using the service. In addition to the banks, even Paytm supports Samsung Pay and Samsung has partnered with Axis Bank to provide UPI support.
Is India one of the first markets for Samsung Pay?
No, Samsung Pay was launched in 2015 alongside the Galaxy Note 5 smartphone. It is available in 12 countries which include South Korean, China, US, Spain, Malaysia, Australia, Singapore, Brazil, Puerto Rico, Russia and Thailand.
How should one use it?
At its core it has been designed to replace your debit or credit card. It will scan the card using the camera and generate a 16 digit token number for payments. The token number is randomly generated for every transaction and it is totally randomised and has nothing to do with the number of your credit card or debit card.
It can be used for the payments of good and services by waving your phone. One can also make payments using quick response (QR) codes for UPI enabled apps or Paytm at a merchant’s location.
How secure is it?
Security is a big issue these days and to appease the users, Samsung says that no data is locally stored on the phone. This means even if your phone is stolen chances are your credit and debit card information doesn’t land up in wrong hands. There are three levels of security — the fingerprint scanner on the phone, the phone PIN and even if they fail the phone actually doesn’t house the card information. Even when that comes a cropper, the phone has Samsung’s enterprise security suite called Knox which keeps all the data encrypted on the phone in a secure area when it is compromised.
What’s the biggest advantage of using it?
From one single app you can access all your debit cards and credit cards, Paytm and UPI enabled services. The convenience is its biggest USP. Moreover, as Samsung Pay uses both NFC and MST technologies it will work everywhere a card machine works. The only caveat is that this is a luxury as it is only available on select Samsung phones which cost more than Rs 20,000.
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