While Apple Pay has won the buzz war since its launch in October, Samsungs mobile payment initiative is poised for higher use at retailers, according to Mike Cook, a senior vice president and assistant treasurer at Wal-Mart Stores.
Cook was speaking with Jason Oxman, CEO of the Electronic Transaction Association, during the organization's conference this week in San Francisco. The flexible technology powering Samsung's wallet will drive the company's success in mobile payments, Cook said.
Samsung bought LoopPay in February to bolster its mobile payment initiative. LoopPay's technology is less reliant on Near Field Communication (NFC), which allows Samsung to work with a broad range of merchants almost immediately.
Consumers will likely use "multiple different mobile wallets" in the future, Cook said. But most point-of-sale terminals weren't designed to accommodate NFC, the technology that enables Apple Pay transactions.
That will likely open the door for Samsung, which uses a fob to transmit a magnetic signal to a standard payment terminal. If you look at LoopPay, its got a great chance of succeeding" because it can be accepted by most merchants, Cook said, though he cautioned Samsung still has challenges, inlcuding "reliability" concerns with the underlying LoopPay technology, such as its ability to emit a magnetic stripe.
Walmart is a participant in the Merchant Customer Exchange, which plans to release a mobile wallet called CurrentC, and the retail giant is also active on a number of other mobile commerce fronts. CurrentC is expected to use QR codes to power payments, another method more widely available than NFC.
Given the large number of merchants without NFC capability, the technology will most likely be replaced before it gets off the ground, Cook said. I think theres a high likelihood that it could be leapfrogged, because theres such a small marketplace for it at this point, he said.
Beyond Apple Pay and Samsung's rivalry, the conference also had a large dose of politics, as several former high-ranking government officials discussed their experience with consumer fraud and data security investigations.
Banks should pay careful attention to recent Operation Choke Point settlements with the $422 million-asset CommerceWest Bank in Irvine, Calif., and the $544 million-asset Plaza Bank, also based in Irvine, according to Michael Bresnick, former head of the Department of Justice's Financial Fraud Enforcement Task Force, and now a partner at Venable.
These settlements suggest bank executives need to have full knowledge of the transactions flowing through their systems, Bresnick said. Additional criminal charges, such the ones filed against CommerceWest, are likely immanent, he said.
In a separate discussion on payment security, Christian Wilson, a former executive with the U.S. Secret Services electronic crimes task force, warned about the rise in data breaches at small and mid-size businesses.
There are probably only a couple dozen folks in the world could hack a major retailer, such Target or Home Depot, said Wilson, now a vice president for cyber investigations at First Data. But a much less sophisticated understanding of payment security of is required to steal data from a smaller merchant.
Hackers can make big profits by selling data on the black market, where the threat of prosecution is scarce. When Wilson left the Secret Service, the agency had open investigations in more than 30 countries around the world, he said.
Given the minimal risk of being tracked down by law enforcement, they're are seeing big returns from selling consumer data. The U.S. is not doing a lot of extradition from Pakistan for card fraud these days, he said.