The tale of the 'pays'—Apple Pay, Android Pay and Samsung Pay—has been largely underwhelming.

Three years after Apple Pay's launch, only about 1% of payments in the U.S. are contactless mobile payments, and Apple Pay didn't benefit significantly from the robust holiday shopping season for overall digital shopping.

There are also signs that merchants and banks are, if not moving on without the third party mobile payment apps, at least charting their own course. Chase Pay has fed off the remains of the defunct Merchant Customer Exchange CurrentC wallet, while digital marketing companies such as Cardfree — a company founded by the pioneers behind the successful Starbucks app — target retailers with a combination of pinpoint marketing and mobile payments.

The challenge for the third party apps, according to experts, is they exist mostly to automate the point of sale. These apps lack the marketing advantage that retailers have when offering their own loyalty program or mobile app.

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Nana Murugesan, Samsung vice president and general manager, is in the midst of bridging this gap. Samsung launched a new marketing program for Samsung Pay in November, a rewards initiative that encourages consumers to ramp up their use of mobile payments by scaling perks based on usage. These benefits are in addition to the reward program attached to the credit or debit card that funds the Samsung Pay purchase.

That loyalty program followed other upgrades such as location-based deals and smartwatch support as the Samsung Pay app looks to make headway in the U.S. and other markets.

The early returns appear to be positive. Samsung this week reported that, since the launch of Samsung Rewards, the number of daily Samsung Pay transactions has nearly doubled and the number of “power users” — those who are making mobile purchases almost once a day — more than doubles every week. The company did not report specific numbers, but noted there has also been a surge in overall monthly active users.

"It's clear that adoption of mobile wallets such as Apple Pay, Android Pay and Samsung Pay, has so far been disappointing in most markets," said Zil Bareisis, a senior analyst at Celent. "However, I would argue that it is too early to write off mobile wallets as a flop; all the wallets have been making strides in each of the three key dimensions: availability, acceptance and value proposition."

Murugesan recently detailed Samsung's strategy for making its mobile wallet stand out in the increasingly competitive digital payments market. The following has been edited for length and clarity.

PaymentsSource: Where is Samsung Pay now available? And where can the rewards program be used?
Murugesan: Our digital wallet is now available to 10 countries, and our partnership with Mastercard for Masterpass will open up hundreds of thousands of merchants in 33 countries for online payments. Samsung Rewards is available to all Samsung Pay users in the U.S.m and in the coming months it will expand to include a wide variety of Samsung products and services.

How important is the link between loyalty and mobile wallet adoption/usage?
To lower barriers to adoption, we need to demonstrate to consumers how they’ll benefit. Changing consumer behavior requires an incentive, and that’s what Samsung Rewards provides.…In May, Samsung Pay also began supporting merchant membership and loyalty cards. This has given users quick and easy access to savings, rewards and other offers from their favorite stores while leaving their physical wallet at home.

Is there an awareness gap that remains regarding mobile payments and wallets? How can that be improved?
There is still an opportunity to further improve awareness with consumers and merchants regarding mobile wallets — specifically around understanding the high level of security through tokenization or the convenience of paying with phones and wearables. Samsung Rewards is just one part of our larger strategy to build momentum for the digital wallet. At Samsung, we believe that these kinds of innovations – along with access to the larger Samsung ecosystem and the premium quality of the phones themselves — will be a crucial part of attracting new customers and expanding our user base.

How close is mobile payments adoption to maturation?
This past year, mobile payments systems like Samsung Pay have developed more robust features – adding support for deals, coupons, gift cards, loyalty cards that work virtually anywhere thanks to both [Near Field Communication] and [Magnetic Secure Transmission], allowing them to become true digital wallets…. People are more likely than ever before to try mobile payments and to keep using them every day.

Are there still technology gaps such as interoperability and availability that need to be addressed before mobile payments mature?
Like all new technologies, there are opportunities to constantly innovate and optimize. As a mobile payment service, Samsung Pay can already be used almost anywhere you can swipe a card. The next level is adding features to shift from paying with your phone to a full mobile wallet.

Do you see retail-specific apps (such a store’s own mobile app) as a competitor?
Merchants are critical partners in the effort to bring mobile payment technology to more consumers. Samsung Pay is very committed to working with merchants for in-app payments and online payments, specifically through the partnership with Masterpass, which will allow Samsung Pay users to shop online.

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