At the Samsung (NASDAQOTH: SSNLF) Unpacked event at which the company introduced its next generation Galaxy S6 and Galaxy S6 edge phones. One feature that the company introduced with the devices is a mobile payments capability known as Samsung Pay, a pretty obvious competitor to Apple's (AAPL +0.00%) mobile payments service known as Apple Pay.
Apple Pay is NFC-based, and requires that retailers have NFC terminals in place. Apple is working hard to expand Apple Pay's footprint, but of course it'll take time before Apple Pay is widely accepted enough to truly "replace" one's credit card.
Samsung Pay appears to offer a similar NFC-based service, but the Galaxy S6 also includes built-in support for LoopPay, which works with traditional credit card terminals. This, according to LoopPay's website, means that the technology "works at most places because stores and restaurants require no special equipment" to accept LoopPay.
More widely accepted right off the bat
Samsung's decision to build LoopPay into its Galaxy S6, in addition to a more Apple Pay-like NFC solution, may turn out to be incredibly smart. The installed base for Samsung Pay, by virtue of the LoopPay support, should be much larger than the installed base is for Apple Pay today.
Of course, Apple Pay (and presumably Samsung Pay when NFC is used) is more convenient than the LoopPay technology as it requires a more complex series of steps to actually make a payment. That said, a good way to think of what Samsung is doing is that it is using LoopPay as a "stopgap" until more merchants accept NFC-based payments.
Apple has some real advantages, though
One big advantage that Apple Pay has over Samsung Pay is the fact that Apple is probably more "serious" about it. I'd bet that Samsung developed "Samsung Pay" in order to have a nice "checkbox feature" in order to sell more Galaxy S6 phones today. It's not clear how dedicated Samsung is to making this service broadly available (particularly the NFC-based part of Samsung Pay) and to building the relationships necessary to make Samsung Pay a long-term success across the world.
Put bluntly, Samsung doesn't really have a track record as a good steward of an ecosystem; it seems to view software and services as necessary to sell hardware, while Apple seems to view hardware as a vehicle by which to deliver software and services as fellow Fool Andres Cardenal argues here.
Apple seems to view Apple Pay as though it is a first class citizen within the iOS ecosystem. Further, I suspect that Samsung Pay will be limited to Samsung's premium smartphone line (since those touch sensors aren't cheap) which I'd imagine has a lower installed base than Apple's iPhones. I expect that within the next few years, every new iPhone sold will support Apple Pay.
Samsung wins short term, but Apple Pay still has more long-term potential
In the short term, Samsung Pay -- by virtue of the LoopPay support -- should be more broadly supported. Obviously, it remains to be seen how widely the LoopPay functionality is used (which requires that a user place his/her phone up against the terminal). Over the long-term, though, I think that Apple is probably going to do a better job supporting and enhancing Apple Pay than Samsung will with Samsung Pay.
