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Samsung made several announcements about Samsung Pay at the annual Money20/20 conference last month in Las Vegas as the burgeoning mobile wallet continues to find its footing in the market.
Samsung Pay's newest features include online payments, thanks to an agreement with MasterCard, a location-based deals feature and in-app payments. The deals feature is particularly interesting because it brings more value to the mobile wallet and is something that's lacking in other offerings.
Mobile Payments Today had a chance to sit down with Haley Kim, vice president of the payment business group at Samsung, during Money20/20. We've recapped that conversation in a Q&A format.
MPT: We often talk about mobile wallets not having enough value-added services for consumers. It seems as though Samsung Pay is adding more utility to its offering than the others. What drives Samsung in that direction?
Kim: Many of us realize that payments isn't broken. We recognize that there should be more [features] than just the ability to pay. There are two [aspects] that we try to bring to Samsung Pay. One of them is more convenience. The other is some kind of benefit [in the form of loyalty].
Those are two aspects of the mobile wallet that we constantly seek to bring so that consumers will prefer using their phone over paper and plastic. We started this change with gift cards and it was the most convenient area for us to help get rid of plastic. And then the other area was membership and loyalty. After we added loyalty/membership cards and gift cards, we looked at other areas and focused on offers and deals as a starting point to offer real value. We added nearby deals so that consumers can benefit from discounts wherever they go. We've worked with deal aggregators as well as directly with merchants. We've also worked to add deals that are exclusive to Samsung Pay.
MPT: Consumers in South Korea have a long history of being tech savvy and have used their phones to pay for years. What kind of unique challenges does Samsung face in the U.S. to get consumers to use Samsung Pay?
Kim: With every market we launch in, there's a certain level of aptitude when it comes to new technology. With South Korea, you're right, they are more tech savvy. But the good thing is that with other countries that aptitude is rising in regard to consumers using new technology and we see that potential.
When we look back at something like [remote deposit capture] — that took a while for consumers to adopt and now most consumers use it because it's convenient. That said, I believe mobile payments will become mainstream. It's going to happen, but it's a matter of at what speed will that happen. And how quickly that happens will be different in each market.
MPT: How much does something such as Nearby Deals get merchants to promote mobile payments? Do the merchants realize the value of those kind of partnerships?
Kim: I'm sure that they do. They see how we're helping them by digitizing gift cards and loyalty or membership cards. I think in general, mobile payments can provide benefits to not only consumers, but also our partner banks and merchants.
With merchants, there are two things they care about: increasing sales and increasing [customer] frequency. With something like Nearby Deals, merchants can not only reach consumers that are in the store, but outside around the store as well. Those kinds of value-added services will bring more traffic to their stores. And that will correlate with more sales as well.
I think merchants can see huge potential in how Samsung Pay can provide additional value to them other than being an additional mobile wallet they accept in the store. We'll look to continue to innovate with Samsung Pay to help merchants bring more consumers into their stores.
MPT: How much do security concerns play into consumer adoption? What does Samsung have to do as a company to ease consumers’ concerns about security?
Kim: I think [security] requires constant education and constant communication. When it comes to consumers' security concerns, I think a lot of it is perception. Consumers might be afraid of adding [payment] card numbers into a phone when in reality that card payment is more vulnerable than a tokenized transaction on a phone. So, there needs to be consumer education not only from Samsung, but the industry overall needs to communicate to consumers as well.
MPT: As Samsung adds more features to Samsung Pay, can you imagine a scenario where consumers will decide which brand of phone they will buy based on the mobile wallet for that system?
Kim: I see a lot of comments on social media where users are saying, 'Samsung Pay saved my life today.' I don't think those kind of comments are mainstream now because mobile payments in still in its early stages, but I certainly see a lot of people who want to try it, use it and they love it.
That's why, when you go to the Google Play store, our product rating is 4.7. It's one of the most [highly rated] apps in the U.S. I have full confidence that consumers will stick with a Samsung device because it provides a unique, valuable service through Samsung Pay.
MPT: Samsung is in a unique position because a user can also have Android Pay on a phone as well. Was there ever any concern about forcing consumers to choose between using either Android Pay or Samsung Pay? Were there any concerns about causing confusion, as well, with consumers?
Kim: I don't think so. Consumers are already accustomed to having multiple mobile pay apps on their phones, especially in the U.S. They are well aware there are multiple mobile pay apps on the market.
However, [for] those who use Samsung Pay, I strongly believe it comes down to consumer choice. But the good thing for us is that Samsung Pay is accepted in 90 percent of merchant locations [because of its MST technology]. When you really want to use it, this is the only solution you can use almost anywhere you want to pay with Samsung Pay.
I don't have any concerns about Android Pay on Samsung phones. We'll coexist with the other and consumers will make their decisions on which one to use based on the services each provides.