Samsung prepares for mobile payments

NEW YORK — Samsung hopes its new mobile-payment service will let you leave your wallet at home.

It's a claim that Samsung Pay's rivals — Apple Pay and Google's Android Pay — aren't able to make because they work with fewer merchants. Those rival services require merchants to have newer payment equipment with wireless technology known as near-field communication.

Samsung Pay can mimic the old-school magnetic signals produced by credit-card swipes. That means it should work with most existing equipment.

Nonetheless, most people won't leave their wallets home. Plastic cards aren't difficult to carry around and hand over, so there isn't an urgency to sign up for any of these services. And although Samsung Pay works with more merchants, acceptance isn't universal because of technical and behavioral constraints.

Samsung Pay will make its debut in South Korea on Thursday. It will start in the U.S. on Sept. 28, with a test period beginning on Aug. 25. Samsung plans to expand to the U.K., Spain and China as well. Android Pay is to come out later this year in the U.S., while Apple Pay launched in the U.S. in October and expanded to the U.K. last month.

A closer look at Samsung Pay and how it compares with Apple Pay and Android Pay:

• What are the advantages over plastic?

Although taking out plastic isn't difficult, using the phone is more convenient if you already have it out — say, to check Facebook while waiting in line. It's also great in cabs: When you pull out your wallet late at night, your keys might accidentally slip out.

The bigger advantage is security. With all three services, you're assigned a substitute card number unique to the phone. The store gets this number, so if its system gets hacked, your main card number isn't compromised. To work, the substitute number must be paired with a one-time code generated by that device. Hackers getting that number also will need physical possession of your phone.

• What are the disadvantages?

Because Apple Pay and Android Pay require near-field-communication payment equipment, there's a good chance it won't work where you're trying to buy something. Samsung Pay's magnetic technology serves as a backup. You don't need to worry about what your merchant has. The phone figures it out automatically.

Despite promises of wide acceptance with the magnetic technology, Samsung Pay won't be universal. You're not likely to give the waiter your phone — let alone your passcode — to pay the check at a restaurant. The technology also won't work where you need to insert your card into a machine, such as a gas pump or ticket kiosk.

• Why is Samsung doing this?

The company says it won't get direct revenue from transactions. However, it hopes the service will be compelling enough for people to choose a Samsung phone over a rival's.

• How will Samsung Pay work?

When you're ready to pay, just swipe up from the bottom to see a list of your cards. The card you used most recently is there by default, although you can swipe left or right to choose another card. You hold the phone near the store's payment terminal and place your finger over the home button to authorize the transaction with your fingerprint.

This can be done whether you're on the lock screen or the home screen, or if the screen is off (but the phone is on). If you're in an app such as Facebook, you need to get to the home screen first. That's one big difference with Apple Pay, which works from any app and doesn't require the initial swipe up. Android Pay will work like Apple Pay, except it won't work with the screen off.

• What will you need?

The service will initially work with just four Samsung phones — the Galaxy S6 or S6 Edge from this spring and the upcoming Note 5 or S6 Edge Plus. Android Pay will work with a broader range of Android devices — those with a near-field communication chip and at least the KitKat version of Android, which came out in 2013. That includes those four Samsung phones.

Source: Samsung prepares for mobile payments