Samsung Pay is one of many options in the mobile payment market, but it might be one of the only options that exists as a loss leader for its parent company. Samsung’s thought process is that Samsung Pay isn’t a revenue stream for the company, but instead a way to sell phones and keep its users in the Samsung ecosystem.
Apple Pay, for contrast, charges card issuers 0.15 percent per transaction on credit cards and half a cent per transaction on debit cards. That means Apple actually makes a little bit of extra money each time you use Apple Pay to purchase anything at an NFC terminal. Samsung Pay doesn’t charge banks anything, so it’s simply an extended feature of your phone, not a service and potential moneymaker for Samsung.
While Samsung doesn’t have the clout that Apple does, removing transaction fees certainly does give them a leg up in negotiations with banks. Card issuers will definitely be more likely to quickly hammer out a deal with Samsung because it doesn’t cost them anything, while Apple negotiations are slower and more complex to hash out. Throw in the fact that Samsung Pay can mimic a typical debit or credit card to work at a terminal that isn’t equipped with NFC and you’ve got a winning combination for fast adoption.
Side note: Google also doesn’t charge banks any fees for using Android Pay. That puts Apple as the outlier among the three top mobile payment systems, which will definitely hamper Apple’s ability to sign up new banks and cards compared to the other two.
While I don’t think Samsung Pay is going to be a single deciding factor in whether or not someone decides to buy a smartphone, it’s hard to argue that it wouldn’t swing things in Samsung’s favor if someone was on the fence. And Samsung is hoping that it keeps them on Samsung’s side of the fence when it’s time for an upgrade in a few years.