SEOUL/BARCELONA ― Samsung Electronics on Sunday debuted its own mobile payment system, Samsung Pay, during the unveiling of its new flagship smartphone the Galaxy S6 and its Edge variant.

Samsung plans to launch the service this summer in South Korea and the United States, with Europe and China to come later.

Samsung Pay is a mobile wallet application that allows users to pay for goods and services by waving their smartphone near a register instead of swiping a credit card or pulling out cash. 

The new service is considered a direct response to Apple Pay, which was launched last year on the new iPhone 6.

Nearly a week before the unveiling event in Barcelona, Samsung announced its acquisition of Boston-based mobile payments technology start-up LoopPay last month.

Samsung Pay, bolstered by LoopPay’s Magnetic Secure Transmission technology, allows payment through the magnetic strip used in older card readers, and doesn’t solely rely on Near-Field Communication like Apple Pay and Google Wallet.

This means the system can be processed by virtually all credit card machines, and businesses do not need to replace their hardware or infrastructure.

Currently, 90 percent of payment machines in the U.S. are magnetic swipe readers. In terms of store numbers, LoopPay has partnered with about 10 million retailers nationwide, compared with 220,000 for Apple Pay.

Jumping in the mobile payment market dominated by Apple and Google, Samsung may have wanted to rapidly expand its presence by adopting the more widely used magnetic swipe system, experts say.

“Apple Pay will prove a market and educate partners in 2015, but it leaves room for someone to become the dominant payments provider for the rest of the Android-powered market,” said Ian Fogg, head of mobile analysts at IHS Technology.

“Samsung aspires to provide wide compatibility through enabling barcode, MST and NFC support.”

Samsung added that its service offers better security than NFC-based systems as it uses tokenization to protect users’ payment information.

Lee Seung-woo, an analyst at IBK Investment and Securities, however, pointed out that Samsung needs to start working on the next-generation service considering the ever-evolving payment environment globally.

“Samsung Pay may have better compatibility but it seems less advanced than Apple Pay, which features futuristic fingerprint and NFC technologies,” he said. “The performance of the Galaxy S6 also will be crucial for Samsung Pay’s next step.”

By Lee Ji-yoon & Kim Young-won
(jylee@heraldcorp.com), (wone0102@heraldcorp.com)