Samsung Electronics' new mobile payments system Samsung Pay made its Korean debut on Thursday, aiming to replace credit cards with mobile phones.
Starting with the Korean service, Samsung Pay will be released in the US on Sept. 28 after a monthlong beta service. Launches in other markets are set to come in phases.
Key to the service is its compatibility with existing credit card terminals, as it creates a small magnetic field that can be detected by standard magnetic strip readers.
Its competitors like Apple Pay and Google Wallet work only on Near-Field Communication terminals that require special hardware to be installed at retail stores.
Considering Apple Pay has yet to be adopted widely due to this technological problem, Samsung Pay has an upper hand to secure a wider user base in the early phase of adoption.
According to Samsung, Apple Pay will be accepted at 1.5 million stores in the US by the end of the year, while Samsung Pay will be compatible with 95 per cent of merchants on day one.
Samsung Pay also supports NFC payments for transactions. Like its rivals, the service has a fingerprint identification system for security.
Samsung has already inked a deal with every card company in Korea for the new service, while expanding ties with local firms in the US
The Korean tech giant has the service preinstalled on its flagship smartphone Galaxy S6, its Edge variant and new bigger-screen smartphones -- the Galaxy Note 5 and the Galaxy S6 Edge Plus.
Samsung Pay's success is crucial for the company to fend off challenges from its archrival Apple and Chinese runners-up like Xiaomi.
Amid its sluggish device sales, Samsung needs to create its own ecosystem in the soaring mobile payments market, which would allow it to maintain its market position as the world's largest smartphone-maker.
In the ever-evolving mobile market, Samsung may have secured a firm footing as a device-maker, but its software prowess has not yet made a mark due to its reliance on Google's Android operating system.
The company's device sales are also falling amid fierce competition. Despite positive initial reviews, sales of the Galaxy S6 fell short of expectations. The new big-screen smartphones have no fresh features to wow the market.
"Now other Android phone-makers are rolling out quality products that compete head-on with Samsung. The success of Samsung Pay is therefore crucial for its entire mobile business," said an industry source on condition of anonymity.
"If successful, Samsung Pay will attract more loyal customers for Samsung phones."