Samsung announced a new rewards program aimed at capturing a greater share of the mobile payments market. Consumers who use Samsung Pay will now earn points for every transaction. These can then be redeemed for a variety of prizes, including Visa prepaid cards, Samsung Products, and gift cards. The new promotion is available only to individuals with qualifying Samsung Galaxy devices. This will be the first proprietary rewards program developed for a mobile wallet, in the United States.
Unlike traditional credit card programs, the new Samsung Pay Rewards will be built on a per-transaction basis – not per-dollar-spent. With rewards cards, a user who spends $100 in a single transaction may get 100 points. If they were to spend $50, with that same card and merchant, they would get just 50 points. With Samsung Pay rewards, the rewards users get depend on the number of times you use your device within a month. For example, individuals who use Samsung Pay 7 times per month will get 20 points per transaction for a total of 140 points.
| Tier Name | Number of Transactions per Month | Points Earned |
|---|---|---|
| Tier Name Entry Level | Number of Transactions per Month 0 - 5 | Points Earned 10 Points/Qualified Transaction |
| Tier Name Silver | Number of Transactions per Month 6 - 20 | Points Earned 20 points/Qualified Transaction |
| Tier Name Gold | Number of Transactions per Month 21 - 30 | Points Earned 30 Points/Qualified Transaction |
| Tier Name Platinum | Number of Transactions per Month 31 or more | Points Earned 40 points/Qualified Transaction |
Participants are limited to just 50 transactions each month, which means you can never earn more than 2,000 points within a single month. It is currently unknown how many points are needed for certain redemptions, making it difficult to gage the value of these rewards. Typically, reward points across a variety of retail and credit card programs are valued at around $0.01 each. If this holds true for this Samsung Pay, the added value for consumers will be minimal.
The use of a mobile wallet, like Samsung Pay, does not stop consumers from earning their regular credit card rewards. Therefore, using a reward card in conjunction with Samsung Pay will allow users to essentially “double dip”, and earn more bonuses per transaction.
Samsung’s new rewards platform taps into one of the problems mobile payments have to struggle with. In an interview with Fortune, Michael Taiano, director of the Financial Institutions Group at Fitch Ratings, said that for consumers “paying with an ordinary credit or debit card is easy and familiar”. He postulated that “[to get] consumers to change may require giving them more of an incentive to use a mobile payment apps.” Taiano pointed to the slow growth-rate of e-commerce as a model for what we can expect from mobile payments, if the continue along the current status quo. Despite having been around for over 20 years, mobile payments account for just 8% of U.S. retail spending. In 2015, mobile payments totaled roughly $8.71B in the United States.
Competitors like Apple Pay have already started to experiment with incentive programs. In recent months, the company partnered with several major credit card issuers to provide extra rewards to cardholders who use their cards with Apple Pay. Android Pay experimented with a short-lived rewards program earlier this year as well. As of yet, none of the mobile-payment companies have thrown as much weight behind their incentive programs as major banks have behind their credit cards. It’s difficult to tell immediately how long it will take for these programs to evolve to something meaningful. However, until they do, it is difficult to predict how much of an impact it will have on the overall sales volume.
Unlike Apple Pay, Samsung has faced a much more difficult fight for market share. Because of its open nature, the Android operating system is present on multiple devices, without a single regulating body. As a result, Samsung Pay has to directly compete with Android Pay and other mobile payment apps. This rewards program may give Samsung the edge over its other Android-based competitors. Apple (NASDAQ: AAPL) operates on a closed platform – meaning it can control what mobile payments iPhone users have access to. A 2015 survey by Chadwick Martin Bailey, a market strategy firm, showed that 44% of users said a wallet-specific rewards program would influence the to make an in-store mobile wallet payment. This was by-far the most popular driver for adaption.
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