Samsung bets big on Magnetic Stripe Transmission for Samsung Pay

Samsung Pay will launch this summer in the United States. Samsung has high hopes that Magnetic Stripe Transmission will help make Samsung Pay beat Apple Pay.

The new Galaxy S6 and S6 Edge, which will go on sale April 10, support Samsung Pay. The Apple Pay alternative payment service will launch though not with the release of the new Galaxy phones. Samsung says that Samsung Pay will go live this summer.

The major difference between Samsung Pay and Apple Pay is the support of Magnetic Stripe Transmission (MST). MST was developed by LoopPay, which got acquired by Samsung in February.

K Shin, President and Head of IT and Mobile Division at Samsung Electronics said about the LoopPay acquisition: “This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce. Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal.”

MST allows to make a mobile payment at standard card swiping terminals. The Magnetic Stripe Transmission technology generates changing magnetic fields over a very short period of time. This is accomplished by putting alternating current through an inductive loop, which can then be received by the magnetic read head of the credit card reader.

The signal received from the device emulates the same magnetic field change as a mag stripe card when swiped across the same read head. LoopPay works within a 3-inch distance from the read head. The field dissipates rapidly beyond that point, and only exists during a transmission initiated by the user.  

MST only works with swiping terminals, not with the ones where you stick your card inside. The support of MST in addition to NFC enables Samsung Pay to be accepted in many more locations than Apple Pay. This is though only true as long as Apple is not succeeding in pushing roll out of new NFC terminals faster. Samsung is on the save side either way. 

Samsung says that based on their internal research 90% of retailers in the U.S will support Samsung Pay at launch. Samsung has so far partnered with MasterCard, Visa, Synchrony, as well as a growing number of banks and credit unions to offer debit, credit, and private label cards on Samsung Pay.

How does Samsung Pay Work

At the cash register, users will pull up the Samsung Pay app by swiping upward, select a card, authenticate the their identity using a fingerprint, and then tap the device on the point of sale terminal. For traditional magnetic stripe readers, users will tap their phone on top of the card reader slot.

The Magnetic Secure Transmission (MST) technology sends a signal to the card reader which emulates a physical card swipe. The process for NFC payments is virtually identical, with users simply required to tap their phone near the NFC receiver. In fact, the device will automatically detect what sort of terminal is being used and adjust accordingly.

The fight between Samsung Pay and Apple Pay is actually mute as there will be no definitive loser. Samsung customers will make their mobile payments with Samsung Pay and Apple’s customers use Apple Pay.