Mobile Payments Titan Samsung Pay Pulls Back From Bargain Devices

July 11, 2018         By: Steven Anderson

For a while, Samsung Pay was easily one of the biggest competitors Apple Pay had around in mobile payments. Its ease of use and ability to be accepted just about anywhere a credit card could be taken made this a major name in the field. Yet there are reports now that Samsung Pay is pulling back the reins a bit and consolidating its position around its higher-end devices only.

Basically, Samsung announced that the more budget-friendly smartphones Samsung offered would no longer have Samsung Pay access, and those who wanted in would now have to buy in at the higher levels of device operations. The reason? Costs. Reports note that it costs 5,000 won—about $4.50 US—per device to add Samsung Pay, and when spread over even a few thousand devices, the costs can be fairly substantial.

Lest you think this penny wise and pound foolish, reports suggest that it’s not just the costs, but rather, that lower-end devices aren’t putting Samsung Pay to work all that often anyway. Moreover, as the budget phones are mainly used by teens and seniors—two demographics largely out of Samsung Pay’s wheelhouse anyway—the loss of Samsung Pay likely won’t be noticed in many cases, let alone harshly felt.

Not a bad move, fiscally, but there’s a problem here; even as Samsung Pay is cutting back, competitor LG is rolling out more devices that feature its own payment system, LG Pay. Out of the eight LG smartphones to bow this year, seven had LG Pay included.

The question thus becomes, is Samsung slitting its own throat to save a few bucks per phone by not offering a service no one’s really using anyway and opening itself up to competition, or is Samsung ditching a money-losing proposition and poising itself for improved profitability? It’s a good bet that it’s just the latter; after all, if Samsung’s ditching a service that people aren’t using anyway, the chances of these people migrating to a completely different phone brand to use a completely different branded service are fairly long.

Still, deliberately cutting out a chunk of market isn’t exactly the greatest development. It means cost savings, sure, but it also means a whole lot of business that’s no longer on the table.