Samsung recently announced plans to release an “innovative” debit card this summer in partnership with online personal finance company SoFi. The South Korean conglomerate noted the financial product is an evolution of its Samsung Pay digital wallet service, which launched in 2015.
The Samsung Card?
Samsung’s press release for its forthcoming debit offering is light on details, lacking even a rendering of its payment card. The post notes the product will be backed by a cash management account (CMA) as part of a new Samsung Pay experience. The company also notes it has been working on a “mobile-first money-management platform” for over a year.
Samsung vice president and general manager of its Pay unit, Sang Ahn, said details about the initiative would be available “in the coming weeks.”
For its part, SoFi maintained Samsung’s enigmatic tone on its website, but it also provided a link to its SoFi Money page. The Mastercard-backed product is a CMA with cash-back rewards, select ATM fee reimbursement, and no account charges. The offering also comes with standard mobile banking services like remote check depositing, peer-to-peer money transfers, and spending analytics.
Though neither company has confirmed the Samsung debit card will have those features, it is reasonable to assume there will be some overlap in services.
Why is Samsung Launching a Debit Card?
Right now, it’s unclear why the South Korean electronics company is launching a debit card.
Statista states the conglomerate’s contactless payment system had 51 million users in 2018, predicted to rise to 100 million this year. By adding a physical card in its service, the corporation would diversify its ecosystem, which might increase brand loyalty.
But Samsung Pay is currently free-to-use, so attaching a presumably no cost CMA would not rake in the millions.
Apple makes money from its branded payment card because it is connected to a Goldman Sachs-backed product with a high APR. TechCrunch believes Google would use its rumored checking account card to gather consumer data it would later use to minimize risk on future financial offerings. Samsung could follow either of those pathways with its debit product to open up vast new revenue streams.
Even if the smartphone maker does not profit from its payment card right away, the long-term payoff could be tremendous.
Last November, Bloomberg reported Goldman Sachs extended $10 billion in credit to Apple users, who promptly racked up balances totaling $736 million in about a month. With APRs ranging from 13.24 to 24.24 percent, Apple and its partner bank generated between $97.4 million and $178.4 million in interest. Samsung would love to add even a fraction of that revenue to its books, especially given its flagging handset sales.
The use of the word “innovative” in the corporation’s announcement also hints at a novel product design. Apple made its card stand out by making them out of titanium. Samsung would attract a lot of attention if its debit card came with a 6.7-inch AMOLED panel. After all, The corporation has made similarly “out-of-the-box” design decisions in the past.