In Depth

Future Frontiers: PayPal’s EMV Adventures, Samsung’s Mobile Move And Amex’s New Friends

Hurricane Joaquin may have weakened substantially as it made its way up the East Coast this weekend, but the torrent of news that was payments and commerce last week was anything but sparing. As always, the Data Dive is ready to refresh you about everything you need to know to get through the next five days.  

Samsung Shows Strong On Day 1

The last of the “big three mobile pay” players officially took the stage last week with the official U.S. launch of Samsung Pay.

The MST-enabled mobile payment that works with more than 90 percent of all merchant terminals in the U.S. has technically been in the U.S. since August for a select number of users were part of the beta test. The service that was initially planned for a summer 2015 release was delayed, according to Global Co-GM of Samsung Pay (and CEO of LoopPay) Will Graylin in order to make sure the release of Samsung Pay coincided with the release of Samsung’s flagship phone, the Galaxy S6 edge.

“If you put two and two together, you’ll see that [September] makes sense. It’s where we can actually get the most bang for the buck,” Graylin told MPD CEO Karen Webster at the time. “So that’s one misconception [about the delay until September] that people need to be clear about.”

Now the edge is here – and Samsung Pay is ready to play well with others.  

Lots of others. Unlike the other two “pay” competitors, Android and Apple Pay, Samsung does not need NFC terminal support to work.  

That makes it the only mobile payment service that can work at most existing and new terminals, including most magnetic stripe, EMV and NFC terminals.

“Samsung Pay works with almost any card terminal from Day 1, and Galaxy owners can shop with a wallet they never knew was always in their hands,” Injong Rhee, EVP of Samsung Electronics, Global Head of Samsung Pay, said in a company news release. “As the leader in innovation, Samsung is proud to introduce the first mobile payment solution that allows you to pay almost anywhere you can swipe or tap your card today.”

Provided you have the right phone – Galaxy S6, S6 edge, Note5 and S6 edge+ devices – and the right network – AT&T, T-Mobile, Sprint and U.S. Cellular.  

And the right payment method. Samsung has some ground to gain with issuers still. The service has all the major networks – Visa, MasterCard, Discover and American Express – but its list of issuers remains short – though it includes a few major issuers like Bank of America, Chase and U.S. Bank, as well as Synchrony (private label cards).

“Apple Pay, with its head start of nearly a year, has over 500 banks enrolled in its program, and while figures have not been released yet from Samsung, it’s more than likely that the number of U.S. banks will be similar to the couple dozen that Apple had when it launched. Therefore, a bigger impediment for Samsung will be the number of banks supporting it combined with not having Verizon on board,” Bob Graham, head of Banking and Financial services at business consulting firm Virtusa, told Ars Technica.

But Samsung also has it secret weapon: MST (Magnetic Secure Transmission) technology that makes it work at almost any POS that already take credit cards. It also (we learned in taking part of in the beta test) causes sales clerks to react as though one has just performed digital sorcery in front of them, especially if they have just uttered the phrase “we don’t take Apple Pay.”

And Samsung Pay did see some big Day 1 support.

“At a time when more consumers are looking for safe, simple and widely accepted mobile payment solutions, we’re thrilled to join with Samsung Pay to bring this groundbreaking technology to life,” Craig Ludwig, head of product for TSYS’ merchant services segment, told PYMNTS. “We look forward to supporting our clients as they offer secure and convenient mobile payment acceptance for their customers.”

PayPal Courts EMV (Rebuffs TRC)

PayPal started its rollout of its PayPal Here Chip Card Reader in the U.S. on Sept. 30. Compatible with both iOS and Android, the reader will enable both forms of EMV (chip and PIN, and chip and sig), mag stripe and NFC transactions, including Apple Pay, Android Pay and Samsung Pay.  

Given the various difficulties in getting SMBs on the EMV train, the new devices and educational materials probably can’t come a moment too soon for those hoping to see wide EMV adoption in the U.S. marketplace.

“It is important that merchants understand the consequences of the EMV liability shift of fraud losses. To help our small business customers prepare, we have been providing updates on the process since earlier this year and educating businesses on what the liability shift means for them,” Brad Brodigan, vice president and general manager of retail for PayPal, wrote in a blog post Sept. 28.

Brodigan further noted that much of the difficulty with EMV seems to be stemming from confusion.

“We found that a lot of merchants are confused; they don’t have a level of awareness. Our efforts have been not only to help them understand what the fraud liability is, but also what the benefits are of going through an EMV certification process. We don’t think enough merchants are aware of the benefits that they can have related to this type of change. We’ve been talking to merchants about things like their ability to actually lower their expenses through lower fraud rates. Also, in addition to that, there’s a tremendous amount of opportunity for merchants as they go through this externalization to lower their costs for point-of-sale hardware and software,” he wrote.

However, while PayPal is embracing EMV (the chip-reading device has been available for PayPal customers in the U.K. and Australia for two years), they were not quite so welcoming of an unsolicited offer from the infamous TRC Capital to purchase 3 million (discounted) shares.

Previously, TRC has extended such unsolicited offerings to big companies including Yahoo and Gilead. In late August, the Toronto-based firm extended an unsolicited offer to AT&T to buy 3 million of its shares at $31.30, or 4.3 percent below AT&T’s closing price on Aug. 26, 2015, according to an AT&T statement.

“TRC has a history of mini-tender offers,” AT&T wrote. “Like its other offers, this one puts individual investors at risk because they may not realize they’re selling their shares at a discount. AT&T urges investors to get current stock quotes for their shares of AT&T, consult their financial advisors and exercise caution with respect to TRC’s offer.”

Mini-tenders always amount for less than 5 percent of the company’s equity, which lets it avoid regulations put up by Section 14(d) of the U.S. Securities Exchange Act, or SEC Regulation 14D and are only subjected to anti-fraud regulations imposed under 14E. The point of the operation is that it allows the firm to avoid disclosure requirements, which are mandatory for larger tenders.

The latest offer against PayPal values the firm’s shares at a 4.6 percent reduced rate. PayPal was, unsurprisingly, quick to respond. The company noted that it does not endorse TRC Capital’s offer and recommended that shareholders not tender their shares.

“PayPal is not associated with TRC Capital, its mini-tender offer or the mini-tender offer documentation,” the company noted in a statement. The statement further noted the intent of TRC’s offer was to “catch investors off guard if the investors do not compare the offer price to the current market price.”

Amex’s Big Week Of Deals

The time-honored advice in the event of a bad breakup is to find someone new — the easiest way to forget about what one may have lost is to move on to someone or something new, after all. And if that someone new is somehow an archrival to your ex, well, all the better.  

It is advice that American Express has clearly gotten and responded to. After tough splits with both Costco and JetBlue this year, the embattled card network seemed fated to close out the year 2015 as the Taylor Swift of payments — incredibly famous for being broken up with a lot.   

But as the week closed out – Amex found itself in the headlines over some good news – it’s expanding into Sam’s Club.

This partnership allows Amex to have a presence at Sam’s Club’s more than 650 locations, and a spot in the eighth largest U.S. retailer. As part of the card’s launch into the store, Amex is also offering card members a $25 statement credit after using an eligible Amex card on $45 or more at a new Sam’s Club membership in-store from now until Oct. 31.

“We are pleased to expand the places where our Card Members can shop, and starting today they have access to high-quality products, brands, and services at a great value from Sam’s Club,” said Anré Williams, President of Global Merchant Services at American Express. “Our offer is a terrific way to get Card Members excited about signing up for a new Sam’s Club membership. We look forward to working with Sam’s to deliver great benefits to our mutual consumer and small business customers.”

Does this mark the beginning of the turning of the page for American Express and the big-box stores? Hard to say as of yet, but Sam’s Club sure seems excited.

“The acceptance of the American Express Card underscores our commitment to bring greater ease and flexibility to our members’ shopping experience. American Express – known for their exceptional customer service, loyal, higher-spending Card Members and advocacy of small businesses – will help to extend the value of membership,” said Tracey Brown, chief member officer at Sam’s Club.

The Sam’s Club announcement was the second big piece of wheeling and dealing news out of Amex this week.   

Klarna, the largest of Europe’s online “buy now, pay later” companies, said Tuesday (Sept. 29) that it has added one of the marquee names of payments to its roster: American Express.

The triumvirate is now complete, as the company had already solidified relationships with Visa and MasterCard. And that sets the stage, the site noted, for a continued push to make a dent in the United States. The company has already said it reached an agreement with Overstock in early September, marking its first foray into North American eCommerce, with the overall strategy aimed at increasing mobile phone and smart device usage.

Klarna’s gains in U.S. visibility come while Amex picks up traction in countries, mostly located in Northern Europe, that do not tend to see much in the way of credit card transactions.

So the moral of the story? This week is all about embracing the future. PayPal’s future is in making payments happen literally anywhere in anyway (and protecting its stock price from Canadians) Samsung’s future is in mobile anywhere there is a POS terminal (it hopes) and Amex’s future is in making new friends, preferably all over the world.  


Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.


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