Samsung and SoFi are launching a new debit card: What to expect
The presumed competition: Apple and Google
This summer, Samsung will become the newest brand to enter the online banking space. Through a partnership with SoFi, Samsung Pay users will now be able to open a cash management account that comes with a physical debit card. If this sounds familiar, there’s good reason, as two recent developments immediately come to mind: Apple and Google cards. Apple, Samsung’s biggest rival when it comes to mobile phones, partnered with Goldman Sachs last year to issue a credit card embedded within the phone’s mobile wallet. And more recently, reports surfaced that Google will launch a debit card and online checking account powered by Google Play.
There are, of course, significant differences between the cards. For starters, the Apple Card is a credit, not debit card. While both products were driven by a desire to increase usage of the providers’ Pay products, Apple likely had increased services revenue in mind as well. Higher swipe fees for credit cards also allow Apple to offer richer cashback rewards than what is expected from a debit product, and Apple’s complimentary tools help customers manage credit in addition to spend. The Samsung card should look much more similar to a Google Pay account, with the biggest difference being banking partners. While Google is expected to partner with multiple banks to hold customer deposits, Samsung has a single partner in SoFi.
The SoFi partnership is perhaps the most interesting piece of the story. SoFi, of course, has its own no-fee SoFi Money account, which currently offers a generous 20% back on DoorDash purchases and streaming services. One would assume there would be some sort of rewards or cash back incentives on the Samsung account when using Samsung Pay. In addition, SoFi’s new Mastercard debit card comes with cell phone insurance, which is notably absent from the Apple Card. If Samsung can combine that insurance with Samsung Pay rewards, they are more likely to attract and retain users of their mobile phones.
The actual competition: Online challenger banks
Overall, Samsung’s banking competitors are more likely to be other online challenger banks like Chime, Varo, and even SoFi rather than Apple. But despite the flood of options in the online banking space, now may be as good of a time as any to enter. Because of economic uncertainties brought on by COVID-19, individual savings rates are at historic highs and some germ-conscious customers are switching to contactless payment options.
Samsung could offer the same moderate APYs that SoFi has on its cash management account, or they could take the route of another telecom player, T-Mobile, whose MONEY customers can earn up to 4.0% APY on their balances. Samsung is already in a good position to reap the benefits of increased usage of contactless payments and mobile wallets as Samsung Pay’s iris authentication can even recognize users wearing protective face masks.
What we think
More details are expected in the coming weeks. While we don’t expect the fanfare that accompanied the Apple Card launch, Samsung Pay’s banking addition could prove to be an under-the-radar winner for Samsung’s mobile phone users.