Samsung Pay to consider offering marketing support to card firms

Samsung Electronics Co, the provider of online mobile wallet platform Samsung Pay, is mulling a supportive strategy that provides credit card companies with marketing assistance while charging them a fee for payments via Samsung Pay.

According to multiple sources from the credit card industry on Tuesday, Samsung Electronics is said to review a marketing strategy that returns an amount of the fees it charges credit card issuers. The amount can vary depending on the card payments.

“An intensifying competition against its emerging rival Apple Inc. has forced Samsung Electronics to charge credit companies fees,” said an unnamed official from a credit issuer. “Samsung Electronics, however, is mulling taking an approach that strengthens its partnerships with credit lenders, which have suffered financial difficulties.”

A possible strategy may resemble the marketing support offered by global payment networks Visa Inc. and Mastercard Inc. to their partners for making payments in their brands.

The payment processing companies charge merchants the so-called card brand fees in return for marketing assistance.

The fee rates are yet to be fixed but industry sources projected that Samsung Electronics would take a variable pricing approach that charges reduced fees based on factors such as the market share of a given credit card issuer or the volume of card payments.

Samsung Electronics had notified 10 card companies in May about an end of the automatic extension of Samsung Pay contracts that it had adopted since the launch of the online payment in 2015.

Industry sources said that the move will likely lead Samsung Electronics to charge card companies payment fees.

If Samsung Pay charges a fee of 0.15 percent per payment, credit card companies will have to pay a total of 70 billion won ($53.5 million) in fees per year.