JPMorgan Chase & Co recently unveiled a new mobile wallet service, signaling the global bank’s interest in challenging rival lenders and disruptive payment systems like Apple Pay and PayPal Inc. On Monday (26 October), the bank said it would compete directly with other mobile wallets such as Apple Pay, Android Pay and Samsung Pay.
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According to an article on CNBC, JPMorgan Chase signed a deal with Merchant Customer Exchange that includes chains like Wal-Mart and Best Buy who are on board to accept Chase Pay as a form of payment.
Chase Pay will allow consumers to rack up rewards points with their Chase credit cards as well as with retailers’ loyalty and rewards programs, Gordon Smith, CEO of Chase’s Consumer and Community Banking division, said in a speech at the Money 20/20 conference in Las Vegas.
Collectively, MCX-affiliated companies operate more than 110,000 locations and process more than $1 trillion in payments annually. Walmart is itself utilizing MCX as the mammoth retailer leads the charge against contactless payment, and is partnering with Best Buy, Kohl’s, and Sonoco for the goal. CurrentC has been in development for multiple years, giving Apple Pay an edge with its earlier release timeline.
Chase signed up the Merchant Customer Exchange mainly by promising to cut retailers’ costs, Mr Smith said.
On Tuesday, Samsung announced that in bringing Samsung Pay to the United States it’s working with the four major credit card companies as well as several major banks. Chase Pay also promises a more secure payment method against fraud and improper use.
Chase claims it will offer merchants lower transaction fees if they support Chase Pay, which could be enticing for a few retailers.
“As merchants give us more business, we will give them better pricing”, Mr Smith said in an interview. This will provide an advantage to Chase Pay over Apple Pay, due to criticism from financial and security experts that additional middle-men i.e. Apple increases the risk of cybercrime through a breach of an iTunes account. It uses easy-to-implement technology that many merchants already have, namely the same technology used to scan gift cards, and can connect a merchant’s loyalty programme directly into the payment experience.
Chase Pay is expected to be made available to Chase customers by mid-2016. Apple provides the card issuer (banks) with the information that the user has entered into the device.
It works through an app that displays a barcode on the customer’s smartphone screen.
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JP Morgan’s consumer bank has already factored the system’s near-term launch costs into its expense estimates, and expects the benefits to come over the medium to long term.
