As Apple Closes in on Samsung, the Rivals Get Set to Lock Horns in M-Payments

With Apple Inc.’s record results in the fourth quarter, the computer giant appears to be closing in on long-time rival Samsung for dominance in the crucial worldwide smart-phone market. Meanwhile, Samsung is working to catch up with Apple Pay, the highly publicized mobile-payments service Apple launched in October.

For now, Samsung seems to be stumbling in the handset market, shipping slightly more than 76 million units in the latest quarter, down 3% from the previous year, according to a report released Thursday by Juniper Research. Altogether, with 315 million global shipments in 2014, Juniper figures the Korean tech giant racked up a 25% market share last year.

That decline has opened a door for rival Apple, which is now nipping at Samsung’s heels. Driven by the introduction of new iPhone 6 and 6 Plus models, Apple shipped 74.5 million smart phones in the quarter, an all-time record for the company and a 46% leap over the results recorded in the same quarter in 2013. Juniper reckons Apple’s worldwide share at 15%.

In the United States, Apple accounted for just under 42% of all smart-phone subscribers at the end of November, according to the latest numbers from comScore, a Reston, Va.-based researcher. Samsung’s U.S. subscriber share at the same time was 29.7%, the firm reported earlier this month.

Helping to drive Apple’s fourth-quarter handset results was the introduction of Apple Pay, which works only on the two new iPhone models. While the mobile-payments service has attracted many of the nation’s largest banks and received a flood of publicity, hard numbers on adoption and usage have been scarce from the typically closed-mouthed Apple.

The company did report this week that Apple Pay, which so far is available only in the United States, accounts for two-thirds of all dollars charged as contactless payments on the nation’s three largest payment-card networks. There are an estimated 220,000 contactless point-of-sale devices deployed at U.S. merchants. Some 750 financial institutions have so far made their cards available for the Apple Pay wallet, the company said.

While mobile wallets overall have posted mixed results at best in recent years, Samsung is reported to be close to launching an Apple Pay competitor. It is expected in March to introduce Samsung Pay on its new Galaxy S6 model, though hard details on the service, rumors of which have been leaking out at least since October, have been hard to come by. Samsung refused a request for comment from Digital Transactions News, as did Visa Inc., which is reportedly working with the handset maker on the project.

Samsung is reportedly working with LoopPay Inc., a Burlington, Mass.-based technology startup whose wallet works by sending a signal that exploits the same magnetic field at a POS device as any mag-stripe card. In this way, LoopPay devices can be used at most POS terminals. Wallets like Apple Pay, by contrast, rely on near-field communication (NFC), which so far is restricted to contactless devices at merchant locations.

Digital Transactions News reported in November that LoopPay is also working on a tokenization technology to mask card data, and expects to have the technology ready this year.

“We’re aware of the speculation that LoopPay is working with a potential handset-manufacturer partner,” notes Will Graylin, chief executive and cofounder of LoopPay, in a statement sent to Digital Transactions News. “We are focusing now on marketing our current and upcoming products. We do not comment on speculation about the future of the company.”

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Observers expect that the Galaxy S6 will include an NFC chip as well, since Samsung has substantial investments already in NFC technology. And while LoopPay’s technology could open up most of the in-store market, Samsung Pay would still be restricted to the latest Samsung smart phone, much as Apple Pay can be used only with the iPhone 6 and 6 Plus.

Altogether, some experts say Samsung has a tough road ahead of it catching up with Apple Pay. “Overall I’d say that there are major complexities associated with making something like this work, so despite [LoopPay’s] advantages in point-of-sale acceptance, we’d still have to look at point-of-sale payments as a long-term effort,” Rick Oglesby, senior analyst at Centennial, Colo.-based consultancy Double Diamond Group, tells Digital Transactions News by email. “Samsung is obviously taking payments more seriously now and that’s a positive, but consumer adoption will take a long time.”