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Samsung Pay shows promise, but mobile payments face uphill battle

Samsung's answer to Apple Pay is being tested in its home country of South Korea. CNET had the chance to see how the mobile payment system works in real life.

Store up to 10 credit cards in your phone. Cho Mu-Hyun/CNET

When South Korean tech giant Samsung announced that it had bought LoopPay earlier this year to become its own Samsung Pay mobile payment system, there were doubts over how well it would integrate the service with its popular range of mobile phones and wearables. After all, Samsung has launched a torrent of features and apps for its Galaxy phones down the years, many of which are long since forgotten.

Now it's time to find out if Samsung Pay is a keeper. Samsung began beta testing its mobile payment platform on Wednesday with 1,000 testers in its home country, and is gearing up for an August rollout of the mobile payment system, likely to coincide with the launch of the Galaxy Note 5.

With mobile payments now a highly competitive arena -- both search giant Google and iPhone maker Apple have redoubled their efforts with Android Pay and Apple Pay -- Samsung Pay has a lot of ground to cover. So how well does it work in the real world? Turns out, it's money well spent.

Ease of use

Samsung, along with its competitors, has been preaching how easy it is to use mobile payment systems. This is the most important selling point. The more time a consumer wastes on figuring out how a particular app or service works, the less likely it is to be embraced.

Loading card details on Samsung Pay is very easy. Open the app for the first time and it will ask you to register a card. Like Apple Pay, all you need to do is place the physical card face up in front of your phone's camera, and it will read the number within a second. (Incidentally, all the text for menus and features I saw were translated from Korean -- Samsung said the official English terminology has yet to be finalized.)

Up to 10 credit cards can be loaded, and you can choose a preferred card by swiping left or right. You cannot display your cards all at once on a single page, however. I hope Samsung adds a "see all" option, so that I can pick one out immediately instead of swiping until I hit the one I want. Not many will find this bothersome though, since few people have 10 different cards.

Scan in cards with your phone's camera. Cho Mu-Hyun/CNET

There are two ways to turn on Samsung Pay after registering card details: pressing the app icon or swiping up from the bottom of the screen to drag the preferred card out. Either way is easy, but swiping the card out looks much cooler, and easier if you are the type to plaster your home screen with apps.

Once the preferred card image is on the screen, you can choose to either input a password or place one of your fingers on the fingerprint scanner embedded in the home button, depending on how you set up the card during registration. Once the phone knows it's you, you can place the phone on a payment terminal in the store and it will trigger the payment. A digital receipt will be loaded on the screen once the payment is successful.

I was impressed with how sensitive the fingerprint recognition is. The Galaxy S6's home button protrudes more on than the Galaxy S5, which was widely criticized for having a weak sensor. Samsung insiders say this was done to increase sensor sensitivity. If the Note 5, which will likely be the second phone to have Samsung Pay, has the same scanner, then consumers will have no problem using it without hassle.

Launching the app took around 7 or 8 seconds, depending on how fast the phone reads your prints. This will no doubt get even faster as smartphones are armed with better sensors.

I haven't tried Apple Pay personally -- you can read CNET's hands-on here -- because it is not yet available in South Korea, so I can't compare the two, but it seems that Samsung Pay will most likely be similarly easy to use.

Hold your phone to the terminal for instant payment. Cho Mu-Hyun/CNET

Any old card reader

Having both magnetic secure transmission (MST) and near-field communication (NFC) is the biggest difference between Samsung Pay and its competitors. NFC is what powers existing contactless payment systems. MST, here thanks to LoopPay, allows Samsung Pay to work on any magnetic strip card reader.

I tried out Samsung Pay in multiple stores: coffee shops, restaurants and convenience stores in the Gangnam area of Seoul.

The clerks in one of the coffee shops didn't seem to know what Samsung Pay was, and a kindly old lady in a convenience store clearly had no clue either. This, though, was on July 15, the first day of beta testing. The readers on both shops looked haggard and worn, and were obviously not contactless. But Samsung Pay worked by putting the phone near the reader. The woman in the convenience store praised the advancement of technology, and forced me to buy more grapefruit juice so that she could get to use the payment system again.

A much more tech-savvy clerk in another coffee shop told me he believes that Samsung Pay will work anywhere in the country, thanks to this trick.

The advantage in South Korea -- where NFC deployment has been a slow grind -- was very obvious. Contactless readers are less conspicuous here than in Europe, and in a country where Samsung has a market share of around 60 percent, the tech giant seems better poised than its likely competitor Apple Pay to secure users. As always, its home country will serve as the best test bed to evolve the service further.

Scores of developed countries will likely differ, though. The US still prefers magstripes, so the wider availability is an advantage, but that doesn't always translate to wider adoption. Europe, where NFC is commonplace, really doesn't offer much scope for the South Korean tech giant.

But for emerging markets, more tech support is always a good thing. Many countries have plans to deploy NFC more widely, but are yet to reach their targets. Having both MST and NFC guarantees easy access to Samsung Pay in those markets, as long as Samsung's phone sells and the mobile payment service continues to evolve and spread in the low- and mid-end markets.

Against plastic

Samsung Pay faces the same challenge that the smartwatch faces: Does it really replace the good old wallet and plastic cards that we are so used to?

Will this replace the traditional wallet? Screenshot by Cho Mu-Hyun/CNET

For new things to replace old, the advantage or selling point must be obvious, and, to some degree, overwhelming -- like that of a smartphone over a feature phone.

For Samsung Pay and its rivals, it's just the same. It takes me about 3 seconds to get my wallet out of my pocket and pull out my card or cash to pay. It took me about 6 seconds to use Samsung Pay. So why would I prefer it over my tattered leather wallet?

Samsung, Apple and Google have all positioned security as an important advantage. All of them will use token-based security systems, in which a random number is transmitted instead of your credit card information. But a phone can be lost just like any wallet, and if I lose my credit card, I can always call the bank and cancel it.

On the other hand, the smartphone has been touted as an all-in-one from the beginning, and it is an extremely personal device. Wallets and the cash and credit cards jammed inside them are important, but we don't interact with them in the same way. Perhaps in among our calls, tweets, music, emails and videos, the average person might find it natural to just use their smartphone for payments as well. The emotional attachment of phones over wallets may help these payment platforms -- and it may not come down to either/or.

Mobile payment is still evolving. Other, more convenient, payment choices that incorporate already-existing online payment systems into one platform may be lurking. We'll just have to see what Samsung Pay looks like in its official version when it rolls out in August, and how it evolves over the next year.