Apple and Samsung take their fight to mobile payment platforms

Two technology giants—Apple and Samsung—who have locked horns over their smartphones on several occasions, is now extending its fight to mobile payments platform.

Apple is offering its users the ability to tap their iPhones on sales terminals to buy a coffee, snack or train ticket, and is boosting its own revenue stream with ApplePay. The banks it works with for the platform, pay a small charge of 0.15 percent for each transaction, in the United States.

Samsung, which has trailed behind its competitors in software and services, on the other hand, is taking a different path. SamsungPay does not charge its financial partners, but the Korean company is seeking to drive sales of phones and other devices through the platform.

"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 said.

The payment gateways of both the companies are already battling for majority space in common markets such as the United States, China, Australia and Singapore. 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 and Tencent. While Samsung’s payments service had processed more than $1 billion in South Korea since its August launch, still only a fraction of the country's $500 billion-plus credit card transactions last year.

However, Apple’s closed circuit could pose some problems for its payment gateway. ApplePay only works with sales terminals equipped with Near Field Communications (NFC) technology, but phones compatible with Samsung Pay use both NFC and the older technology Magnetic Secure Transmission (MST), which mimics the magnetic strip on traditional payment cards. That gives Samsung an edge in countries like the United States, where NFC terminals are far from ubiquitous.

"Apple wants more control, and the negotiations are more complex," said Christophe Uzureau, Vice President of Digital Payment Strategies at Gartner. "Samsung is more flexible, so from a bank's perspective there is an ability to have more flexible terms and conditions."