Samsung Pay, a pioneering mobile wallet, gets a makeover

In the years since Samsung introduced a contactless mobile wallet app that could work even with magstripe terminals, technology has evolved so much that what was once a differentiator may now be little more than a novelty. So it's time for a second act.

Samsung is combining Samsung Pay and Samsung Pass, a password locker app, into a single product called Samsung Wallet that will also store driver's licenses, student IDs, COVID-19 vaccination cards, home and car keys, among other credentials. Its early partners include BMW and Hyundai.

The Korean technology company's move, which follows similar efforts at Google and Apple, is part of a way to keep device makers' wallets in the spotlight even as banks and fintechs make their own apps more full-featured.

"We're at a point where the wallets are becoming part of the larger ecosystem and it's going to be harder for the standalone mobile payment apps to exist," said Marco Salazar, director of payments for Javelin Strategy & Research. 

There's also a cryptocurrency angle. Samsung Wallet uses security from Samsung Knox and integrates with Samsung Blockchain Wallet to monitor cryptocurrencies and SmartThings access facilities such as offices and hotels. The cryptocurrency service will enable users to monitor prices across different cryptocurrency exchanges. 

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Samsung did not comment by deadline. “As part of our ongoing commitment to  open ecosystems, we will continue to expand on the capabilities of Samsung Wallet by working  closely with our trusted partners and developers," Jeanie Han, executive vice president and head of digital life and MX business at Samsung Electronics, said in a news release. 

While Google provides its own mobile wallet for Android handsets such as the ones Samsung makes, over the years many companies have tried — and failed — to get their own mobile wallets off the ground. Samsung is one of the rare success stories, largely due to the company's purchase of LoopPay, which developed a system that lets a phone wirelessly mimic the signal that point-of-sale terminals detect when they read a magstripe card. In the early days of mobile payments, this technology enabled Samsung Pay to work at stores that could not otherwise accept contactless payments. 

More recently, Samsung has shifted its focus to services that can complement Samsung Pay. For example, it launched a deposit account in 2021 as part of a strategy to turn its smartphones into money management platforms. Samsung also launched Samsung Money by SoFi, which instantly activates when consumers are approved through the Samsung Pay app. Users also receive a contactless payment card, free ATM access through the Allpoint Network and the ability to transfer incentive marketing points. 

Samsung Wallet is part of the march toward embedded payments, and serves as a foundation upon which to add functions in the future, according to Richard Crone, a payments consultant. Samsung is also pressured to increase monetizable daily active users, or MDAU, Crone said.

Definitions of MDAU vary, but the term usually refers to users who log in or are authenticated to an app on a daily basis, accessing services that include advertisement or purchase capabilities. "More functionality on a single app is the way to increase MDAU," Crone said.

Samsung Wallet comes on the heels of a move by Google, which recently relaunched Google Wallet to store transit, travel, incentive marketing and health care credentials, with Google Pay operating as a companion app to conduct payments. Google's strategy is to streamline the increasing number of digital credentials that users have, such as tickets and vaccination cards. It also makes it easier for Google to offer access to digital identification through drivers licenses, a similar goal to Samsung. 

 "A digital wallet should do more than just enable payments in store; customers should also be able to pay online, send money to each other, and perhaps even store a balance in an account, same as cash in a physical wallet," said Zil Bareisis, head of Celent's retail banking practice. 

Like Samsung, Google is trying to corral financial services into a single experience. Google is launching virtual cards through Google Pay, with adopters including Visa, Mastercard, American Express and Capital One. Once a consumer has enrolled, users don't need to re-enter security codes for subsequent payments. 

"Mobile wallets are a treasure trove of data, harboring the most valuable data needed to open new accounts digitally, data to reduce fraud, data to reduce abandonment rates, data for financial inclusion and ultimately to deliver personalized ads and offers," Crone said. 

Both Google and Samsung are competing with Apple, which also operates a digital wallet to store credentials for Apple Pay. Apple Pay enrollment powers Apple Card and Apple Pay Later, its new buy now/pay later feature. Apple is also building digital ID support for driver's licenses. In this way, the Apple Pay enrollments cover payments, card issuing, financial services and access to non-financial services on the App Store, a ubiquity that Google and Samsung are trying to counter by organizing their products in a digital wallet, with the original payment credentials serving as a key to a full menu of functions.  

"Apple Pay Later doesn’t need to do a credit check because they have more data in the wallet than if someone was applying for a new account in person in a branch," Crone said.

There is also a branding element, according to Bareisis. "A wallet is a more inclusive term than X-Pay, and better reflects the trend," he said. 

This is where the IOS and Android ecosystems have diverged, according to Bareisis. "There has never been an Apple Pay app; it's always been the acceptance brand. … In contrast, Google's branding went through a number of iterations from Google Wallet to Google Pay and now back to Wallet."