Does Samsung Pay Compete With Apple Pay, Android?

In a report published Sunday, Citigroup analyst Ashwin Shirvaikar offered some thoughts following Samsung Elect LTD SSNLF introduction of its new phones, Samsung Galaxy S6 and S6 Edge during the Mobile World Congress.

Samsung said that its Samsung Pay services will be introduced to the U.S. and South Korea this summer. Meanwhile, Google Inc GOOG GOOGL also indicated that its Android Pay API will become available in May. Shirvaikar stated that he believes Samsung will support both Samsung Pay and Android Pay initially, but users have to choose which mobile wallet they will use.

As with Apple Inc.'s AAPL Apple Pay platform, security is also a "key selling point" of Samsung Pay. Samsung has apparently updated its KNOX platform to enhance security, but more importantly the company has agreements to use both Visa and MasterCard's token service – similar to Apple Pay.

Shirvaikar added that Samsung Pay supports Near-Field Communication (NFC) and if NFC capability is not available at a point-of-sale, it will automatically transmit the card magstripe information to the older point-point-of-sale system. The analyst stated that this implies merchants do not need to make the NFC investment and Samsung wallet will be usable at 90 percent of merchants.

"Our belief is that this capability is difficult for a merchant to block – recall merchants have successfully blocked Apple Pay," Shirvaikar argued. "MasterCard and Visa credit, debit and prepaid cardholders should be able to use the new Galaxy S6 to pay in-store for purchases, however this cannot be used for in-app purchases (Apple pay can)."