Samsung Pay, uses NFC (Near Field Communication) and MST (Magnetic Secure Transmission) to transmit payment information, will be more used futrurely. Samsung has developed a payment module that allows to exchange money between mobile phones and pay with credit cards using NFC chips in the devices.
After installing the module, smartphones can be used as mobile credit card payment terminals. When you buy some food for delivery or go to a gas station, you can pay for food or gas with you phone without any wireless credit card payment devices. As you doing it, don’t use the value-added (VAN) network, due to the direct communication with card companies. The credit card fees will be reduced with the monthly rental, maintenance and communication fees caused by the use of costly wired and wireless card payment terminals.
Announced on Nov 5, a mobile payment startup Hankook NFC, that it has applied for a patented technology that reads Samsung Pay with NFC when downloading the app to smartphones, and is discussing with Samsung Electronics in order to develop services that can use Samsung Pay to transfer money between smartphones and is discussing with Samsung Electronics to develop new services that can use Samsung Pay to transfer money between smartphones and increase the market.
There have been some comments about costumers who have used Samsung Pay in gas stations, and seems like that some errors have occur. Samsung Pay, uses a one-time security token method, cannot be used at self-service gas stations due to their characteristics of approving a current payment after approving preliminary payment. This is why Samsung Electronics is looking for appropriate measures, including the installment of an NC payment module, to solve those types of errors.
A fintech company said, “If Samsung Electronics expands the application of the NFC payment module, smartphones with Samsung Pay can be used as mobile payment devices. Accordingly, it is possible to not transfer money between smartphones but also pay with credit cards.”
When mobile phones replace credit card payment devices like this, it will greatly affect domestic VAN ecosystem first. Nowadays, VAN companies receive commissions in the payment authorization process after installing its private lines in offline stores and lending card payment terminals. Still, the mobile payment system does not demand any private lines or card payment devices, and allows credit card companies to directly authorize the payments. So, the VAN is not needed anymore, according to the majority of industry experts.
A U.S. startup has also completed the development of the NFC payment module and providing the service in the U.S. But still, the domestically developed NFC payment module can dominate really faster the market with the powerful lever of Samsung Pay.