No longer content with battling among smartphones, it seems Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF) are fighting on a host of device fronts. After watching the popularity of Apple's iPad, Samsung quickly moved into the premium-tablet space with its Galaxy line of tablets. As far as wearables go, Samsung struck first with its Android Wear line of smartwatches, with Apple bringing its watch to market earlier this year.
However, the newest front in the Apple versus Samsung war doesn't appear to be in devices, but rather in the nascent mobile-payments/online wallet industry. After a disparate group of vendors tried to popularize online wallets as a mobile-first format, including Alphabet's Google Wallet, the industry quickly got a shot in the arm as tech-giant Apple introduced its Apple Pay. According to CEO Tim Cook, the service is on track for acceptance at over 1.5 million U.S. locations by the end of this year.
As always, success begets competition: More recently, Alphabet added a mobile-payment app, Android Pay (on Android devices), in an attempt to capture market share. In the end, however, the biggest battle for Android Pay may not be Apple, but rather the interdevice-battle with Samsung's new mobile-payments service: Samsung Pay.
Samsung Pay's technology is better... and that's also a problem
When it comes to mobile payments, Samsung Pay has a powerful feature the other two competitors don't have. Unlike Apple Pay and Android Pay, Samsung is able to work using both NFC and MST (magnetic secure transmission) to conduct payments at point-of-sale terminals, where the former systems only use NFC.
While the differences between the two systems are negligible from a performance basis, MST has the huge benefit of being able to work with existing credit card systems whereas NFC requires many merchants to upgrade. Simply put: Samsung is able to be used at more merchants right now, without any additional equipment purchased by merchants.
However, there's a downside to this added feature. MST requires on-device processors and in-device technology currently only available on Samsung devices. It is for that reason Samsung's Pay will be limited from a user perspective and not a direct threat to Apple or Alphabet. Additionally, the device will have to compete with NFC-supported Android Pay on these supported devices as well, as the service can work on Samsung's devices.
Apple is limited too, but has a huge opportunity
To be fair, Apple has the same limiter, as only iOS devices allow its home-grown mobile-payments system. However, the difference is neither Android Pay or Samsung Pay are direct competitors for iOS phones -- Samsung Pay is incompatible (for reasons earlier discussed) and Android Pay is not on iOS devices, only its forerunner, Google Wallet, which lacks the point-of-site purchasing function, is available on Apple's iOS.
However, there is one function Google Wallet possesses that Apple is looking into copying: money transfers. According to The Wall Street Journal (subscription required), the company is in talks with banks to develop a person-to-person, or P2P, money transfers as easily as text or Air Drop transfers. In the end, I expect this technology -- if included -- to be more popular with digital-literate, traditional-banking weary Millennials than expanded point-of-sale acceptance like Samsung Pay, which lacks this critical feature.
That said, I expect the mobile-payments system to grow in scope and in acceptance. Right now, Samsung's POS technology is top-notch, and has the ability to pull users from Android Pay, but if Apple develops a P2P money-transference function, look for Apple Pay to increase in acceptance. Samsung may have the best technology now, and will probably steal Android Pay market share, but I don't think Cupertino has anything to worry about going forward.