Consumers may now get a refund for their Samsung Galaxy Note7 following an unprecedented decision by the world's largest handset maker to pull the plug on its flagship device barely two months after its launch.

Alternatively, they may exchange the Note7 for another model, with a refund of the price difference between the devices, Samsung said in a statement yesterday.

At this point, however, it is not clear what the refund amount will be and what devices customers can get for their exchange.

Samsung said it is still "in close discussions" with telcos and retailers on the details of the refund and exchange programme.

Market observers said the refund details are complicated by the subsidies offered by the telcos for the handset in exchange for consumers signing a two-year service contract.

"Consumers might get back only the subsidised rate of the phone they paid to the telco," said Mr Michael Tan, 47, a market observer and director of an IT company in Singapore.

It is also not clear whether consumers will be allowed to break their telco service contracts.

The refund process is further complicated for customers who paid a $38 one-time fee for the Samsung Concierge service. The service allows users to upgrade to a new phone every year without paying an early re-contract penalty to the telcos, or to get $350 off from phone retailers when they buy a new phone a year later.

"Samsung is also looking into remedies for Galaxy Note7 customers who purchased the Samsung Concierge service. Consumers can call 1800-Samsung (7267864) for further assistance," Samsung said.

Mr Willy Tan, 34, who bought three Note7 sets at full price from dealers, said he wants a full refund of the retail price of $1,168 apiece.

On Tuesday, the company and the United States Consumer Product Safety Commission asked consumers to stop using the phone - even the supposedly safe replacement handsets - over fire concerns.

There have been several reports of the phones emitting smoke or catching fire, even after they were exchanged through a global recall programme last month. The recall involved 2.5 million handsets, including tens of thousands in Singapore.

A replacement phone began emitting smoke during a Southwest Airlines flight in Louisville on Oct 5 and the passengers had to be evacuated.

Samsung had initially put the blame for the fault on the batteries, but it is now working with safety regulators around the world to investigate the continuing problem.

The Note7, launched in August, was meant to rival the Apple iPhone 7 released last month. The Samsung product, which sports an iris scanner and S Pen stylus, received rave reviews.