Better late than never? Samsung enters Hong Kong’s mobile payments market
The Korean tech giant is launching Samsung Pay in the city months after Apple and Google rolled out similar services. Analysts say it may be too late
Samsung Electronics has started rolling out its Samsung Pay mobile wallet in Hong Kong, more than nine months after rival Apple launched Apple Pay in the city, as the South Korean giant looks to grab market share in an increasingly competitive mobile payments market.
The Korean company on Wednesday announced the launch of its early access programme, which allow cardholders of American Express, Citibank, Dah Sing Bank and Standard Chartered to register for Samsung Pay online and link their credit cards to their Samsung smartphones.
A full launch is expected within the second quarter of this year that will include Bank of China (Hong Kong) and DBS Bank.
Samsung’s foray into Hong Kong's mobile payments market comes months after similar services, such as Android Pay and Apple Pay became available in the city. Apple rolled out Apple Pay in July last year and Google launched Android Pay in October.
Such services allow users to store their credit card information on their smartphones and make payments through near-field communications (NFC) technology or magnetic secure transmission technology, which enable merchants to process transactions wirelessly via electronic signals even if a payment terminal does not have NFC capabilities.
While Apple Pay and Android Pay both use the NFC feature for contactless payments, Samsung’s proprietary magnetic secure transmission technology makes the feature almost universally compatible with any merchant’s point-of-sale terminal, since compatible Samsung devices contain a metal coil that generates a dynamic magnetic field. This functions in much the same way as the magnetic strip on credit cards, which allows Samsung Pay to be used with any credit card payment terminal.
Smartphone models supported by Samsung Pay in Hong Kong include the Galaxy Note 5, Galaxy S7 edge, Galaxy S8, Galaxy S8+, Galaxy S7 and the Galaxy S6 edge+.
Chinese internet giant Tencent Holding and Ant Financial Financial Services Group, an affiliate of e-commerce giant Alibaba Group Holding, have also launched WeChat Wallet and AlipayHK in the city. Those two payment systems allow users to link up bank or credit cards to the apps and make payments offline by having the cashiers scan a QR code generated by the mobile wallet.
Kitty Fok, the managing director at research firm IDC China, said Hongkongers’ cashless payments habits, such as Octopus and credit cards, may make it difficult for companies like Samsung to gain traction in the mobile payments market at this late stage.
Fok said WeChat Wallet and Alipay, which are the most popular mobile wallets in China, were able to attract a large user base through incentives, such as discounts, were offered to users whenever they paid via mobile.
“Samsung is a bit late to the Hong Kong market,” Fok said. “The issue with Samsung Pay is that only Samsung users are able to use the mobile wallet, which limits the number of users the company can attain.”
She said Samsung Pay is also at a disadvantage compared to Google’s Android Pay, since any user with an NFC-compatible device will be able to make payments with Android Pay.
“For Samsung to succeed, they need to partner as many merchants as possible and offer discounts to attract users.”