Market Insight

Challenges await Samsung Pay following late arrival to UK

May 17, 2017  | Subscribers Only

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Samsung pushed back Samsung Pay’s launch in the UK to 16th May 2017.

Samsung partnered with Visa, Mastercard and major banks in the UK, including HSBC, Nationwide, AMEX. At launch, Samsung Pay is compatible with Samsung Galaxy S6, S7, S8 series, Galaxy Note 5, Galaxy A5, Galaxy A7, and Galaxy A9.

Our analysis

UK is a key market Samsung Pay can’t afford to miss

The UK is one of the key markets for device-based mobile payments services, with a smartphone installed base of 62 million (in 2016) and a mature financial services infrastructure. Apple and Google already launched their mobile payments services respectively in 2015 and 2016. Samsung planned to launch Samsung Pay in the UK by the end of 2016; however this was pushed back to 2017. IHS Markit estimates the top 10 countries that have relatively high addressable devices for Samsung Pay include: China, the US, Russia, India, Germany, South Africa, Brazil, South Korea, the UK and France. Samsung Pay is active in eight of the top 10 countries already, Germany or France could be the next country to expand. 

Samsung Pay supports both NFC and MST features in the UK. In comparison with Apple Pay and Android Pay, Samsung Pay’s Magnetic Secure Transmission (MST) feature is a differentiator, which allows Samsung to reach areas they are unable to cover. Samsung developed the MST feature as its mobile payments innovation alongside the NFC mobile payments method, which enables users to make contactless payments on both traditional and NFC enabled POS (Point-Of-Sale) machines. Samsung Pay’s late arrival indicates UK is a market that Samsung can’t afford to miss, where there are more than 5 million smartphones waiting for the service according to IHS Markit research. Samsung Pay’s launch also should have a positive impact on customer loyalty for its smartphone business, especially after the recent launch of Samsung Galaxy S8 in the UK. 

Late start, but opportunities still exist

Samsung Pay will face strong competition from Android Pay in the UK. Unlike Apple Pay, which is only compatible with Apple devices, Android Pay is available for Samsung Android devices. This means Samsung must spare no effort to develop partnerships with local banks, financial institutions and merchants to get Samsung users on board to convert those Samsung users who are using Android Pay and attract those that have not yet started using mobile payments. Leveraging its merchant network and offering attractive incentives for Samsung Pay users can be a winning strategy to compete in the UK, such as Samsung’s reward programme which allows users to exchange the reward points at, or as gift cards from major retailers.

Although Samsung Pay has a late start in the UK, it has a wider global availability than Apple Pay and Android Pay. By the time of writing, Samsung is leading the global expansion of device-based mobile payments services, it has launched Samsung Pay in 18 international markets, whereas Apple Pay is available in 15 markets and Google rolled out Android Pay in 10 markets. 

Samsung Electronics
Research by Market
Mobile & Telecom
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