Currently, Samsung Pay service is free to consumers and credit card companies, but Samsung senses business now. Apple Pay in South Korea launched paid service, falling which Samsung plans also make Samsung Pay will no longer free for credit card companies.
On May 14 Samsung is turning its overall strategy around Samsung Pay after Apple launched Apple Pay for the Korean market. The charging strategy of Samsung’s mobile payment service will be no different from Apple’s but much more related to it.
Samsung Pay plans to charge credit card companies
Since Samsung Pay came into existence has been a free service for credit card companies (banks) and consumers (Galaxy phone owners). But now, “Samsung Pay service is no longer extended for free for all credit card companies in Korea” sent in the notice by the Korean tech giant to the banks. The strategy is expected to expand to all markets around the world where Samsung Pay is available. However, Samsung will start charging a nominal fee to credit card companies in South Korea.
Whereas, the Credit card companies believe it will remain free, as they have heavily promoted Samsung Pay to more than 16 million users over the past eight years. While the South Korean government says contracts between companies are autonomous, it may intervene if the charges are passed on to consumers. But, they may reduce the benefits provided to end users in order to cut costs.
Financial industry insiders speculate that Samsung’s decision is closely related to the recent debut of Apple Pay in South Korea. A credit card company executive said,
“After Hyundai Card, other card companies are also planning to launch Apple Pay, so Samsung Electronics can no longer wait and see. I think Samsung Electronics thinks, ‘If the credit card issuer pays for Apple Pay, why should the credit card issuer pay for Apple Pay? Don’t merchants pay for Samsung Pay? ’”
The sources from the industry are reflecting that Samsung counter Apple Pay in South Korea. For example, Samsung Pay has cooperated with Naver Pay to enable users to make online payments through Samsung Pay. Samsung also plans to activate Samsung Pay on the Galaxy Watch in South Korea to compete with Apple Pay. Analysts are expecting that Samsung is trying to increase the fees paid by credit card companies that have not yet adopted Apple Pay to put pressure on them in the negotiations.
Well, no decision has been made on Samsung Pay yet, a representative of Samsung Electronics said. Market watchers expect Samsung to begin detailed talks with credit card companies by Aug. 10.