Samsung seeks edge in mobile payment war
NEW YORK -- Samsung fired the latest salvo in the smartphone wars Thursday by unveiling a new mobile payment system.
Unlike competitors Apple and Google, systems which only work on specific credit card terminals, Samsung says its phones can now replace plastic credit cards almost everywhere.
When credit cards are swiped a magnetic strip transfers financial information to the credit card terminal. It took 11 years to get that technology on a smartphone.
"It turns out it was really hard," said MIT graduate Will Graylin.
When Graylin figured it out, he sold his company to tech giant Samsung and made millions.
"Our vision is for you to be able to digitize all of your credentials inside of a secure container which is your mobile wallet and your phone should be safer than your leather wallet," said Graylin.
John Heggesteun is a senior research analyst with Business Insider. He says current apps like Android Pay and Apple Pay only work on specialized credit card terminals, which are in limited use.
Heggesteun says it's a "huge" game changer.
"If you start to use Samsung Pay you will be able to use it everywhere," he said.
For security, Samsung Pay requires a fingerprint or pin number, and the actual card number is never revealed. Instead, the phone generates a number that only gets used once.
But there could be privacy issues: the phones collect and pass along data on purchases, store loyalty and discount cards.
"I think when a device can bring you convenience and it can bring you higher levels of security then it is natural that you want to depend on those types of devices to do those things for you," said Graylin. "I think it's part of the future."
If you're worried about the phone tracking your history you can choose to opt out of that feature. Samsung may not have the advantage for long since most businesses are expected to upgrade to credit card terminals that will work with Apple and Android.