In an already crowded space, Chase announced last week that they will launch their own mobile payment option sometime next year. Early adopters of mobile wallets include Google, Apple and Samsung, with Capital One became the first bank to enter the race. Chase will join them with their simply named Chase Pay offering.
How will Chase Pay fare in a market where barely 4% of all in-store purchases consist of some form of mobile payment? Here are some of the ways they intend to differentiate from the competitors:
Acceptance Locations – Unlike the NFC-based tap-to-pay approach that most mobile wallets are built on, Chase, now a member of the MCX Consortium of merchants, will use the same QR based technology as MCX’s CurrentC. Either from within the CurrentC or Chase Pay app, consumers will display a QR code to begin the transaction. The QR code will be read by scanners at the point of sale to initiate payment. Because of MCX’s strong network of retailers, there is a potential for the QR Code approach to provide broader acceptance than NFC-based systems.
Cross Platform – Because Chase Pay works by scanning QR codes displayed on the user’s screen, there is no hardware required in the consumer’s phone. Both Apple and Android users will be able to use it thus creating wider appeal.
Lower Fees – The QR Based transactions occur as a transfer of digital currency between the MCX network of retailers and banks. As such, these transaction bypass the traditional credit card processing system and the associated fees. Chase promises that using their mobile payments options, customers will be charged lower fees than the other mobile wallets in this space. Given that credit card fees are usually paid by the merchant, it will be telling to see how Chase plans to share these benefits with the consumer, either in lower fees or loyalty perks.
Market Share – Chase will auto-populate its existing 94 million credit, debit and pre-paid cards for customers which could increase its adoption rate.
According to Gordon Smith, CEO of Consumer & Community Banking at Chase:
Over time, Chase Pay will make it worthwhile for customers to pull out their smartphones at stores, and leave their credit and debit cards in their wallets.
With a release date for the middle of next year, a lot can (and likely will) change for mobile payments and more specifically mobile wallets. We’ll be keeping an eye on these developments to keep you informed.
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