Samsung recently unveiled its latest generation of flagship smartphones – the Galaxy S21 series.
While the new smartphones offer improved performance and refined designs, they are missing one key feature which has set Samsung apart from competitors.
This feature is called Magnetic Secure Transmission (MST) and has been available on the Samsung Pay platform on its flagships since the Galaxy S6 was launched.
Samsung Pay allows smartphone owners to load a supported bank or rewards programme card onto an app.
The smartphone can then be tapped on a supported contactless terminal to make payments or transact with these cards.
Unlike rivals such as Apple Pay and Google Pay which only support NFC-based payment, Samsung Pay’s addition of MST technology makes it capable of replicating transactions performed via the swipe of the magnetic strip on a bank card by sending a magnetic pulse to the device.
This means that users with a Samsung Pay device that supports MST – such as the Galaxy S20 – are able to make payments using the app on terminals that don’t support contactless payments.
However, Samsung has opted to remove MST support for Samsung Pay on future devices beginning with the Galaxy S21, due to what it described as the “rapid adoption of near field communication (NFC) technology by consumers and businesses”.
While this may be true for developed countries around the world, South Africa’s economy is largely informal, and many traders and retailers may rely on older payment terminals that are not NFC-capable.
This means affluent customers with newly-released Galaxy devices would not be able to make payments at these premises using Samsung Pay.
MyBroadband asked South Africa’s major banks – which provide the majority of point-of-sale payment terminals in the country – whether they anticipated the lack of MST support could affect merchant sales.
Few issues anticipated
The country’s biggest bank – Standard Bank – said it did not foresee any issues due to the lack of this feature as the vast majority of its devices were capable of and compatible with NFC.
FNB Merchant Services CEO Thokozani Dlamini stated that 98% of the bank’s POS devices were contactless-enabled. This includes all of its turquoise branded POS hardware.
“There could be a very small portion less than 2% of the base that might not be contactless-enabled and this is usually where the device has not received the contactless parameter configuration or there is a technical fault with the device’s contactless reader,” Dlamini said.
“Innovative digital payments methods available on Android, such as Samsung Pay and FNB Pay (both Tap and Scan to Pay) have increasingly grown in popularity over the past year,” Dlamini stated.
“In FNB’s lower-income customer base we have seen increasing adoption as customers turn to convenient and safer ways to pay,” he added.
We also asked FNB whether it was more expensive for retailers to purchase and use a contactless device.
“Contactless enablement is not impacted by the price of the device. We do not charge extra for contactless acceptance or for the functionality,” Dlamini said.
Magnetic strip transactions are uncommon
Absa and Nedbank both said all of their standalone Point-of-Sale (POS) devices were NFC-enabled.
Absa’s Head of Commercial Payments and Relationship Banking Enoch Malisa said that magnetic strip transactions were rare.
“While all POS devices in the industry still cater for magnetic strip and chip payments, magnetic strip transactions are not that common anymore,” Malisa stated.
“The introduction of NFC on POS devices over the past seven to ten years has been driven by the introduction of contactless cards that are NFC-enabled,” he said.
Nedbank said it had seen strong adoption by its clients of contactless payments through NFC, with minimal to no complaints received about the inability to use mobile devices and/or cards for contactless payments.
It added that its new solutions – such as Tap on Phone – catered for SMEs to accept contactless payments.