A card has a magnetic strip with the information (account number and other info) encoded as magnetic "bumps" on the surface. When you swipe a card, the reader reads those bumps by measuring how does the electromagnetic field change as you swipe. The issue with that is that your account number and card info are legible to the reader. The store can track you by your card number. If someone wants to steal your info, they can copy your card through the magnetic swipe and use it later on. Samsung Pay works by having a magnetic beacon on its side. When you register a card for it, the beacon transmits electromagnetic waves that interact with the card reader in the same way as your card does. The benefits of that is that it uses the age-old magnetic technology that is already installed everywhere. The issue is that it's just as insecure as the old magnetic strip payment, and in fact, the only way that Samsung Pay works is because magnetic strips are vulnerable to be copied like that. Apple Pay (and NFC payments in general) works differently. You hold your phone/watch close to the terminal, and then they perform a series of complex mathematical "checks" with each other to confirm the transaction and the validity of the "card". In an ELI5 manner, the terminal poses a unique question to your phone, and it responds in a unique way back. For example, the terminal asks "a?" and your phone knows to increment that by 2 letters and answer "c", authorizing the transaction. In real life, the algorithms used are much more complex so that they can't be easily reverse engineered, and part of it is baked into the hardware of the phone/watch so it can't be copied to another device. As a payment process it's much more secure than a magnetic strip, the actual account number is never revealed to the scanner, and you cannot do a transaction without the NFC device being present. If someone "listens" to the communication between your phone and the reader, they can't use that data to authorize future transactions, because every time you pay, your phone/watch emits a different, unique "answer" to the terminal. Samsung's solution isn't "better" or "newer", it is perpetuating an antiquated payment model with all its insecurities in the name of convenience. Apple has (correctly, in my opinion), gone with a more advanced and secure payment processing mechanism instead of using old and obsolete technology. The cost of that is that we need new terminals to be deployed worldwide before NFC can truly replace the old magnetic strip. Apple vs Samsung aside, look at bank cards nowadays: banks are moving to a chip mechanism, that carries the same advanced security features. Europe had it for years, and the US has finally started pushing for chip cards the last couple of years. Credit card companies are changing their rules: if someone's card info is stolen and the magnetic strip is used for a scam, the store will be liable for the fraud - but if the store has a chip or NFC reader and customers use those options, in the case of a stolen card or fraud, the store will not be found liable. edit: To everyone who either helpfully or aggressively have pointed out how Samsung implements their system more securely than what I initially described - I apologize and I give you that. I'm then describing the problems with old magnetic credit card technology in general. I still think that by allowing magnetic strips to exist, they are perpetuating the use of magnetic readers, which, in my opinion, should be totally replaced by chip and nfc scanners in the future. Force vendors to upgrade their systems instead of introducing this sort of compromise to a 20th century technology.
Also if Apple wanted to reach more people to use Apple Pay why didn't they did something like Samsung did with magnetic strip reader? Because it's not as elegant for the user (who must manually invoke it), it's a short-term stop-gap solution that would primarily be used in only one country, and it still doesn't get you full compatibility anyway (especially since so many card terminals are not accessible to customers). It's obvious that they considered it and rejected it, and those are the reasons why I think they decided the way they did. Others are welcome to make different decisions, as Samsung did (buy buying LoopPay, which Apple had equal opportunity to do but didn't). I think this is a nice parallel with Apple's abandonment of floppy drives, and later optical drives, and also their quick embrace of USB back in the day without legacy ports as backup. They'd rather move on to the better technology, even if the broader ecosystem isn't fully there yet. This is what being an early adopter is all about. Remember when people clamored for Flash on iPhones and iPads? Can you imagine where we'd be if Apple had embraced it? It's long past time for magnetic stripe payments to go away, and I don't want to give merchants any excuse to drag their feet. Oh, and contrary to claims in the current top-rated comment in this thread, the security for Apple Pay and Samsung Pay is the same, even for the magnetic transactions. Samsung Pay still uses a token and dynamic secure codes regardless of how it transmits it. The transmission technology is irrelevant. Did you know NFC transactions are unencrypted plain text too? How the numbers get into the terminal isn't nearly as important as the fact that the numbers themselves are useless if stolen.