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Samsung does not fear competition from other mobile payment applications in South Africa, including platform-related services, such as Huawei Pay and Apple Pay.
Huawei recently announced plans to launch its mobile payment service in early 2019, stating that it would support Near Field Contactless Communication (NFC) technology and QR codes.
He is also working on the integration of "some other mechanisms" to make payments, said Huawei.
Philip Henning, head of the Samsung Pay project in South Africa, said at a recent press conference that he was the first to be put on the market in South Africa. The increased competition that is announced as of next year does not concern them.
Although Samsung has laid the foundation for other platforms to be established in South Africa in many ways, Samsung Pay's competitors will still have a long way to go.
"All products put on the market require a lot of work over three years," said Henning.
He explained that the competitors would be able to rely on the bases of Samsung with the Visa and Mastercard Tokenization Systems, but that they nevertheless had to proceed with the necessary integrations.
They will also have to go through the same approval process with the Payments Association of South Africa (PASA).
PASA told MyBroadband earlier this year that Samsung had long discussions with her over a period of at least two years, including checks on the use of biometrics as a means of verification of the cardholder.
"The big question for us was whether the existing rules for card payments would be changed," said Walter Volker, CEO of PASA.
PASA finally found that Samsung Pay was an innovative implementation of existing technologies.
As it runs on the back of the "card rails" – the existing card payment system of Visa and Mastercard – PASA could simply evaluate it against the rules already in place.
Samsung's Secret Weapon – Secure Magnetic Transmission
However, the big differentiator for Samsung is a technology he calls Magnetic Secure Transmission (MST).
This allows phones supporting Samsung Pay to make contactless payments on almost all card distributors in South Africa, even those who do not have NFC technology.
NFC technology is the technology that banks integrate into cards, allowing for on-the-fly payments on compatible devices.
However, less than 50 percent of card terminals in South Africa support NFC technology, said Henning.
While PASA, banks, Mastercard and Visa aggressively use contactless technology, it will take some time before NFC technology is widely adopted in stores and restaurants.
This gives Samsung a quick edge in the market, as MST will enable its mobile payment application to operate in over 90% of cases. To do this, he emulates the magnetic strip of a bank card slipped into a payment terminal.
Samsung is also dominant in the high-end smartphone market in South Africa, where this technology is used, said Henning.
"Thanks to MST, Samsung Pay does not really have any direct competition."
Now read: Samsung Pay arrives on smartwatches in South Africa
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