We live in the age of fast. Fast food, fast work, fast payments and more. In today’s increasingly competitive and convenience-focused marketplace, businesses that cannot keep up with the ever-changing demands of consumers are simply left behind.
That’s why payment flexibility grows increasingly vital to how we run our businesses – after all, the ability to reduce barriers between customers and their transaction preferences is essential to efficient payment design. A common tool used for payments by customers is Samsung Pay MST.
Samsung Pay MST is a technology developed by Samsung that allows compatible devices to transmit payment information to a card reader by simulating the magnetic field generated by a traditional credit or debit card swipe. This allows MST Samsung Pay to be used at merchants that do not have near-field communication (NFC) enabled card readers, which makes it more widely accepted than other mobile payment services that rely solely on NFC.
There are two up-and-coming contactless payment technologies, MST payments, and payments via NFC. As businesses don’t want to be at a disadvantage by losing sales due to the payment technology used, it becomes vital to decide whether to quickly understand if a business should be using MST Samsung Pay or NFC, or both.
In this article, we delve deeper into the details of what is Samsung Pay MST, how MST payments work, and how it compares to NFC. Finally, we look to understand whether or not MST Samsung Pay is still relevant as a payment method for merchants.
What is Samsung Pay MST, and how does it work?
Samsung Pay MST uses Magnetic Secure Transmission (MST) technology to allow customers to make payments with their Samsung Pay-enabled devices at a traditional point of sale terminals equipped with magnetic stripe card readers. MST payments work by generating a magnetic field that simulates the magnetic strip on a physical credit or debit card, allowing the user to make a payment by simply hovering their Samsung Pay-enabled device near the terminal’s card reader. Below is a list of steps of how the process works:
- Customer opens the Samsung Pay app on their Samsung Pay-enabled device and selects the card they want to use for payment.
- The Samsung device is held near the card reader, and the customer simply waits for the payment to be processed within seconds.
- If prompted, the customer can enter their Samsung Pay PIN or their device’s biometric authentication method (such as a fingerprint or facial recognition) to confirm the payment.
- The payment is processed, and the transaction will be complete.
MST payments are a convenient way to make payments using a Samsung device. It allows you to use Samsung Pay at any merchant that accepts card payments, even if they don’t have the latest contactless payment terminal.
This technology makes secure and convenient transactions accessible within a three-inch radius of the point of sale terminal. The benefit goes both ways as vendors do not have to worry about upgrading their equipment as Samsung Pay MST is designed to operate on older terminals without any issue.
The MST payments technology was designed by a company called LoopPay, which Samsung acquired in 2015[MF1] . As a result, a drawback to Samsung Pay MST is that it is owned and operated exclusively by Samsung for Samsung devices.
How is that different from NFC options like Android Pay or Apple Pay?
We’ve established that Samsung Pay MST technology uses magnetic signals to mimic the connection created when swiping a traditional credit card. This gives it the competitive edge of being able to operate on all NFC-enabled terminals as well as POS terminals that don’t have contactless payment options available.
For example, if a merchant only has a magnetic stripe card reader and not an NFC terminal, you can still use Samsung Pay to make a payment by holding your phone near the card reader and using MST to transmit the payment information.
In contrast, Android Pay and Apple Pay are mobile payment systems that rely solely on NFC technology to make payments. This means they can only be used at merchants with NFC-enabled payment terminals.
Since Samsung Pay also incorporates NFC technology into its system, increasing the accessibility of its payment method across a diverse range of platforms. Overall, Samsung Pay offers customers a more flexible and convenient way to make mobile payments, as it can be used at a broader range of merchants than just those that accept NFC payments. It is, in essence, a more wholesome digital wallet.
What is NFC, and how does NFC work?
NFC stands for Near Field Communication. It is a short-range wireless technology that allows devices to communicate with each other when they are close together, typically a few centimeters or less. While Samsung pay MST technology operates on magnetic signals, payments via NFC are conducted using an electromagnetic induction link established between the merchant’s POS terminal and the consumer’s phone.
NFC works by using electromagnetic fields to transmit data between devices. When two NFC-enabled devices are brought close together, an NFC reader in one machine creates an electromagnetic field that powers an NFC chip in the other device. The NFC chip then uses this energy to transmit data to the reader.
NFC has several advantages over other types of wireless communication, including high security and fast data transfer speeds. It is also easy to use, requiring no setup or pairing between devices.
While the initial journey of NFC technology was off to a rocky start because of a seeming inability to catch on due to limited accessibility – such as Google Wallet – which was unable to convert customers to their convenient contactless channel due to its limiting favoritism to exclusively NFC enabled Android devices, the significant shift in consumer preferences came along with the introduction of Apple’s NFC payment service Apple Pay in September of 2014[MF2] .
NFCs widespread popularity today can be credited to Apple’s strategy of securing agreements from several hundred thousand vendors in advance, simultaneously releasing the iPhone 6 and 6 Plus as part of this two-pronged strategy, which happened to be the first Apple Pay-enabled devices from the tech giant.
Which is better: MST Samsung Pay or NFC
Samsung Pay MST payments and NFC are both technologies that can be used for contactless payments, but they work differently.
Samsung Pay MST payments technology allows a device to communicate with a card reader by simulating the magnetic field emitted when a card is swiped. This means that Samsung Pay MST devices, only certain Samsung phones, can make contactless payments at any terminal that accepts card payments, even if it doesn’t have NFC capabilities.
On the other hand, NFC is a short-range wireless technology that allows devices to exchange data over a distance of a few centimeters at terminals equipped with NFC technology.
Both MST payments and NFC have their advantages and disadvantages. MST payments technology has a potentially broader reach as it can be used at any card terminal. On the other hand, NFC is generally considered more secure and is widely the underlying technology of digital wallets such as Apple Pay and Google Pay.
Although this may not be much of a decision to make for merchants already up to date with their NFC-equipped POS terminals, an NFC-enabled device can also process MST Samsung Pay.
Which is better may depend on what you value most. If you want the ability to make contactless payments at a broader range of terminals, then MST technology might be a good choice. If you value security more, then NFC might be a better option.
If I support NFC, do I already support Samsung Pay MST?
The simple answer is yes. MST payments technology allows compatible devices to emulate a magnetic stripe card. Samsung Pay MST transmits a magnetic field that can be read by the terminal’s card reader as if it were a physical card, allowing them to be used for payment at terminals that only accept magnetic stripe cards.
Why isn’t Samsung Pay MST more broadly used?
The consumer typically does not recognize a significant difference between NFC and MST payments technology. As Apple and Google both aggressively push towards the expansion of NFC technology, Samsung recently announced that from 2021 onwards, Samsung Pay would focus its efforts on the NFC technology as well, starting with their Galaxy devices portfolio.
The company effectively signaled an end to the Samsung Pay MST technology while still leaving it on for those with mobile devices that already have the technology.
This was surprising since Samsung paid $250 million for the technology and was lauded as an Apple Pay competitor at the time[MF3] .
While MST may have had the advantage, the success and popularity of NFC payments have rendered the MST technology obsolete, especially considering that the latest POS terminals come pre-installed with NFC technology to facilitate contactless payments.
Finally, EMV chip-enabled POS terminals are becoming a requirement, given the EMV liability shift.
The EMV liability shift changed liability for certain types of fraudulent credit card transactions in the United States starting in October 2015. As a result of the EMV liability shift, merchants are responsible for any fraudulent credit card transactions that occur at their business unless the transactions are conducted using an EMV chip card dipped into an EMV-enabled POS terminal.
Merchants who did not have EMV-compliant payment terminals are liable for fraudulent transactions if they accepted payment with a chip card but swiped the card’s magnetic stripe instead of inserting the chip into the terminal.
The EMV standard is widely used worldwide and has effectively reduced fraud in countries where it has been implemented. The EMV liability shift was intended to encourage merchants in the United States to upgrade their payment terminals to accept chip cards, which are more secure than magnetic stripe cards. This is rapidly facilitating the adoption of EMV-compliant payment terminals in the US, further antiquating the Samsung Pay MST technology.
Conclusion
Merchants want the capability of omnichannel payments in order to avoid missed sales solely because of payment technology incompatibility. Samsung Pay MST allows specific Samsung devices to communicate with traditional magnetic stripe card readers.
It generates a magnetic field that can be read by the card reader, allowing the device to make payments or access other secure information stored on a magnetic stripe card. The technology works with traditional card readers, which means consumers can use phones or tablets to make payments at merchants that do not have NFC (Near Field Communication) terminals.
NFC is a technology that allows devices to exchange data by bringing them close together, typically within a few centimeters. NFC payments are more widely used than MST since NFC are now included in almost all smartphones, tablets, and smartwatches and are the cornerstone of digital wallets such as Apple Pay and Google Pay.
On the other hand, MST payments are primarily used in Samsung devices for mobile payments. Finally, the EMV liability shift in 2015 may have dealt a death knell to Samsung Pay MST, as it required merchants to upgrade to EMV-compatible POS terminals to avoid liability stemming from the fraudulent activity of swiping an EMV credit card, further making obsolete the use of the magstripe and any related technology.
Samsung Pay MST (Magnetic Secure Transmission) was a technology incorporated by the company into its smartphone devices after the acquisition of LoopPay in 2015. The $250 million transaction was hoped to allow Samsung to better compete with other digital payment solutions such as Apple Pay and Google Pay. However, since 2021, Samsung has signaled an end to the technology, emphasizing its strategic focus on NFC, given the mass industry-wide adoption of the technology and the regulatory environment focused on future technologies such as EMV.
[MF1]https://news.samsung.com/us/431-2/
[MF2]https://www.wsj.com/articles/apple-pay-iphone-wallet-apps-11660780139
[MF3]https://www.vox.com/2015/5/13/11562614/samsung-paid-around-250-million-for-looppay-its-apple-pay-competitor
