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Samsung Pay to Open Phone-to-Phone Payment Era
Transfer Money between Phones
Samsung Pay to Open Phone-to-Phone Payment Era
  • By matthew
  • November 6, 2015, 03:00
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Samsung Pay uses both Near Field Communication and Magnetic Secure Transmission to communicate payment information.
Samsung Pay uses both Near Field Communication and Magnetic Secure Transmission to communicate payment information.


Samsung Pay, which uses both near field communication (NFC) and magnetic secure transmission (MST) to transmit payment information, will be more widely used in the future. This is because the company has developed a payment module that allows to exchange money between smartphones and pay with credit cards by using an NFC chip in smartphones.

Once the module is installed, smartphones can be used as mobile credit card payment terminals. When you order some food for delivery or go to a gas station, you can pay for food or gas with your smartphone without any wireless credit card payment devices. While doing it, you don’t use the value-added (VAN) network, due to the direct communication with card companies. Therefore, credit card fees will be reduced along with monthly rental, maintenance and communication fees caused by the use of costly wired and wireless card payment terminals.

Hankook NFC, a mobile payment startup, announced on Nov. 5 that it has applied for a patented technology that reads Samsung Pay with NFC when downloading the application to smartphones, and is discussing with Samsung Electronics in order to develop services that can use Samsung Pay to transfer money between smartphones and expand the market.

In fact, there have been comments that some errors occur when customers try to use Samsung Pay in gas stations. Samsung Pay, which uses a one-time security token method, cannot be used at self-service gas stations due to their characteristics of approving an actual payment after approving preliminary payment. This is why Samsung Electronics is also looking for appropriate measures, including the installment of an NFC payment module, to solve such errors.

An official from a fintech company said, “If Samsung Electronics expands the application of the NFC payment module, smartphones with Samsung Pay can be used as mobile payment devices. Accordingly, it is possible to not only transfer money between smartphones but also pay with credit cards.”

When smartphones replace credit card payment devices like this, it will greatly affect the domestic VAN ecosystem first. Currently, VAN companies receive commissions in the payment authorization process after installing its private lines in offline stores and lending card payment terminals. However, the mobile payment system doesn’t require any private lines or card payment devices, and allows credit card companies to directly authorize the payments. So, the VAN is not needed anymore, according to the majority of industry experts.

In fact, a U.S. startup has also completed the development of the NFC payment module and is providing the service in the country. However, the domestically developed NFC payment module can rapidly dominate the market with the powerful lever of Samsung Pay.