Commentary

Square, Samsung & Cutting Fees in Mobile Payments

Some of the money in mobile payments is starting to be shifted around.

Two separate and unrelated recent moves by two different companies point to some novel thinking around mobile payments.

While these moves may be in the vested interests of the companies making them, it’s the consumer who is likely to see the benefit.

Samsung announced during the Mobile World Congress that it will not charge merchants fees for Samsung Pay when it launches in South Korea.

The payment platform was introduced with the Samsung Galaxy S 6 at the Barcelona event.

Retailers using Apple Pay are charged a small fee per $100 processed, which can impact smaller merchants with tight margins.

Though not yet stated, one would expect the payment pattern to be replicated when Samsung Pay comes to the U.S.

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The other upside for Samsung is that with its acquisition of LoopPay, that company’s payment technology will be included. The payments work at pretty much any terminal that can take a credit card swipe, estimated at somewhere around 90% of the U.S. marketplace.

In a separate announcement this week, payment startup Square said it will offer chargeback protection so that when a consumer disputes a Square charge, Square will cover up to $250 of chargebacks a month, for free.

If a small business ultimately loses the dispute, Square said it will cover the loss for the merchant.

That move is Square’s attempt to become more ingrained in small businesses.

Both of these moves in mobile payments look to help each company capture early market share. While the merchants receive the initial benefit, it means additional costs don’t have to be passed on to consumers.

In the world of mobile payments, early adoption of a particular method of paying can last a long time, since the cost of switching is less about money and more about behavior.

Samsung and Square are looking to become part of the new way consumers pay.

Meanwhile, those consumers or businesses get to save money.

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