Payments

Samsung Pay rolls out cashback rewards to fight low adoption

  • Samsung Pay is offering users cash back on purchases with select retailers
  • Samsung's objective is to drive up use of Samsung Pay, which like other mobile wallets, is still low compared to cards
Samsung Pay rolls out cashback rewards to fight low adoption

Samsung Pay is rolling out a benefit usually reserved for credit card rewards programs: cash back for purchases.

Its goal is to drive up adoption, especially when Samsung Pay, like all mobile wallets, suffers from consumer uptake that’s still dwarfed by that of plastic cards. As little as 1 percent of users are making purchases with Samsung Pay, according a recent Bizrate Insights survey.

The objective of the cash back rollout may not be to deliver an instant uptick in use, but rather to help Samsung Pay stay relevant as mobile payment adoption increases, said Daniel Ives, chief strategy officer at GBH Insights. If Samsung can increase Samsung Pay interactions by even 5 to 7 percent over the next six months, he said, it would be considered a success, with the longer-term strategy to build out additional incentives over time.

Samsung Pay’s foray into cash back rewards is part of a trend among mobile payment providers that are adding reward incentives to drive adoption. For example, last week Square Cast introduced Boost, which lets users pick a place or category to get as much as 15 percent cash back every time they use their Cash Card; and Paytm Canada gives users up to 3 percent cash back rewards when they use the platform.

To access the rewards, Samsung Pay users need to access the “Cash Back” section of the Samsung Pay app’s home screen to find offers from merchant partners including Walmart, eBay, Warby Parker, Instacart, Etsy and others. When the customer purchases an item through one of these promotional offers, they receive cash back reward points applied to their Samsung Pay wallet. Samsung did not specify what percentage cash back customers will receive when they make purchases with partner retailers.

cashbacksamsung
Samsung Pay still has uphill climb to grow user adoption. Use of the digital wallet as payment method still lags behind other mobile wallets like Apple Pay and plastic cards. Of all the payment methods used by U.S. consumers, plastic credit cards were the top method, capturing more than 75 percent of transactions, according to Bizrate Insights. Among mobile wallets, Apple Pay was the most common payment method at 7 percent, with consumers using Samsung Pay just 1 percent of the time.

 

“It’s the scale they just don’t have,” Brendan Miller, principal analyst at Forrester, said of Samsung Pay. “Consumers are still pulling out their cards because there are still issues with whether the merchant has turn on contactless acceptance; there are also issues with MST [technology that allows Samsung Pay to be used at non-NFC terminals], so it doesn’t work 100 percent of the time.”

While cash back rewards are a great incentive for consumers to use the platform, they should be coupled with robust investments in marketing to drive that message back to consumers, said Paygility Advisors partner Christianne Genaro.

“To enhance awareness, you really need advertising — one thing that’s not well understood [by consumers] about Samsung Pay is that it has more utility the Apple Pay; you can use it at a non-NFC terminal and that’s a huge advantage I don’t think Samsung is doing a good job of promoting.”

An additional challenge with the initial rollout of the cash back capability is that the user needs to take a few steps to initiate the reward by pulling up the partner offers — some of which may not necessarily be relevant to the consumer’s behavior and preferences.

“If I’m a power user, I want them to suggest the right offers and coupons … that’s where you’re seeing a lot of usage,” said Miller.

Download Tearsheet’s new guide, detailing eight ways banks can learn from retailers in areas like mobile payments, brick and mortar locations and pop-up experiences. 

Payments

What’s behind software companies becoming payment companies?

  • Software companies are increasingly getting deeper into payments.
  • This increases revenues and expands their total addressable markets.
Zack Miller | December 03, 2019
Payments

Western Union selects AWS as preferred cloud provider

  • The 168 year old financial services firm is making moves for the future.
  • It's turning to AWS to build cloud-native applications and service Amazon shoppers in local currencies.
Zoe Murphy | November 19, 2019
Payments

A new leg of growth: Brex launches first co-branded card with Bank of the West

  • Bank of the West startup customers can apply and receive for a co-branded credit card.
  • This is the first time Brex has launched a co-branded card.
Zoe Murphy | November 06, 2019
Payments

Research: How Apple Card is performing after its public launch

  • After touting Apple Card's successful launch, Goldman Sachs finally provides the public with some data.
  • After publicly launching in third quarter, Goldman has extended almost $10 billion in credit.
Zoe Murphy | November 04, 2019
Payments

American Express partners with Nova Credit translating international credit scoring for immigrants and expats

  • Immigrants to the US complain about how hard it is to obtain credit.
  • Amex has partnered with Nova in translating foreign scores to extend credit to immigrants and expats.
Michael Deleon | October 25, 2019
More Articles