On Monday, October 26, 2015, JPMorgan Chase & Co announced that it plans to launch a smartphone payment service called Chase Pay by mid-2016. With Apple Pay, Android Pay, and Samsung Pay already making inroads into this upstart mobile payment market, the competition for customers will now be even greater with the addition of Chase’s own service. However, when you start to peel back the onion, it is clear that Chase Pay has some very distinct advantages and disadvantages with their solution.
Captive Customer Base – With over 94 million card accounts (estimated at 50% of all U.S. households), Chase is certainly in a position to leverage their current market share in helping to gain traction in the fast-growing mobile payment space. Many of the tech-savvy Chase customers already use their smartphone for Chase banking, and adding the ability to execute a payment transaction with these phones is a logical a
nd smart move by Chase. Chase customers will be automatically signed-up for the new mobile payment service, which will accelerate the adoption towards growing their user base in this market.
Backed by MCX – In addition to Chase’s massive customer base, Chase Pay is backed by the MCX (Merchant Customer Exchange) Consortium which will have the support of over 100,000 retail locations at launch, including some of the bigger names in the industry such as Walmart, Target, Lowe’s, Dunkin Donuts and ExxonMobil.
Device Agnostic – One of the biggest advantages Chase will have in maintaining usage is that they will not be tied to a given smartphone manufacturer. Because Apple Pay will only work on Apple devices and Android Pay on Android devices, Chase Pay has an advantage given its functionality will be supported across multiple devices and mobile platforms.
Retailer Support for Barcode Scanning – Chase Pay’s use of QR barcodes for executing the payment can be supported by virtually any merchant that utilizes 2D barcode scanning. Their service doesn’t require the latest generation of payment terminals which are necessary for the support of NFC-based payment solutions.
Late to the Party – Chase Pay is a latecomer to the mobile payment market which is becoming even more muddled with new solutions with each passing month. Customers that have taken the time to set up their phones to use either Apple Pay or Samsung Pay may be reluctant to switch over to yet another payment method at this point.
Integration Challenges – For those merchants who aren’t members of the MCX Consortium supporting the CurrentC platform, there will be some integration challenges at the POS to accepting these QR codes.
Consumer Usability – To use Chase Pay, consumers will need to unlock their phones and launch an app (either the MCX CurrentC app or the Chase Pay app) to generate the code during the checkout, which is a more complicated process than simply holding your phone near a payment terminal for executing an NFC-based mobile payment app transaction. Consumers may also debate whether these steps will be worth the effort vs. simply taking a card out of their wallets and swiping/inserting to make a payment.
Enterprise Payment Security Alignment – Many retailers who have invested in new payment terminals over recent years have implemented end-to-end encryption, tokenization and other omni-channel payment security solutions which may be impacted by accepting Chase Pay transactions. Even though Chase Pay utilizes their own tokenization technology to ensure the security of their transactions, it remains to be seen how the underlying message format and routing will sync with other transaction flows.
With an extensive built-in merchant base supporting the acceptance of Chase Pay, this new mobile payment solution will be able to quickly gain traction with existing Chase banking customers. However, given the intense competition from the current industry leaders, along with a lagging underlying technology, it will be interesting to see if Chase Pay is able to maintain long-term relevance in this fast growing market.
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