Samsung takes fight to Apple with mobile wallet strategy

Tue Jun 21, 2016 8:46pm EDT
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By Matt Siegel and Se Young Lee

SYDNEY/SEOUL (Reuters) - Smartphone leader Samsung Electronics (005930.KS: Quote) has for years been a spectator as Apple (AAPL.O: Quote) built a services "ecosystem" supporting its products. But now, as the two develop the market for mobile payments, the Korean tech giant is taking the fight to its U.S. archrival.

For Apple, offering users the ability to tap their iPhones on sales terminals to buy a coffee, snack or train ticket is a fresh revenue stream, like its iTunes music and entertainment service. The banks it works with cough up a small charge for each transaction - reportedly 0.15 percent in the United States.

Samsung, which has trailed behind its competitors in software and services, is taking a different path.

It is not seeking fees from its financial partners, viewing Samsung Pay as an engine to drive sales of phones and other devices.

"We're a hardware company, and at the end of the day I think what we're trying to do is get people who hold (one of) our phones and use it ... to just love it more," Elle Kim, Global Vice President of Samsung Pay, told Reuters in Sydney.

It is early days yet; the companies' payment services have been direct competitors in the United States only since last September, China for four months, and Australia and Singapore for just a week or two. Apple Pay is also available in Britain and Canada, and Samsung Pay in South Korea and Spain.

Apple Pay usage totaled just $10.9 billion last year, mostly in the United States, tiny compared with China, where an estimated $1 trillion worth of mobile transactions were completed last year, dominated by Internet giants Alibaba (BABA.N: Quote) and Tencent (0700.HK: Quote).

Alibaba and Tencent have ambitions to develop their business outside China, too, but have yet to make significant inroads.   Continued...

Samsung's new Samsung Pay mobile wallet system is demonstrated at its Australian launch in Sydney, June 15, 2016.   REUTERS/Matt Siegel