JPMorgan Chase is Challenging Apple Pay with Chase Pay
Apple has enjoyed a series of advantages of their innovative mobile payment and digital wallet service with ApplePay. However, Apple and other technology companies which dominated the mobile payment service, is now facing a serious competition from one big financial institution, JPMorgan Chase.
On Monday, JPMorgan Chase announced their mobile wallet called Chase Pay as reported by Forbes. With a mobile payment service, JPMorgan Chase put themselves in a direct competition with Apple, Google and Samsung. Until recently, those three are the players in mobile payment market. At the recent Money 20/20 financial technology conference in Las Vegas, Gordon Smith, head of consumer and community banking of JPMorgan Chase as quoted by Forbes said, "Chase Pay will be available in store, online and in app,"
However, different technology is applied in Chase Pay than their competitors. While Apple Pay and Android Pay uses NFC or Near Field Commnication technology, Chase Pay will implement QR Code technology. Users of Chase Pay will have to show QR Code generated on their mobile phone to cashier to scan the code upon payment. This is different than NFC which allow users to swipe their mobile phone at payment terminal and ease the payment process.
Nevertheless, as a mega bank and financial institution, JPMorgan Chase gains benefit from their connection with Merchant Customer Exchange, a consortium of major retailers.Reuters reported that JPMorgan Chase has already signed the deal with Merchant Customers Exchange to allow member retailers accepting payments through the bank technology. With members like Wal-Mart stores, Target Corp and Best Buy, Merchant Customers Exchange has more than 100,000 outlets with more than $1 trillion of annual sales. Its close competitors, Apple Pay since 2014 has already 220,000 stores accepting the system.
On the other hand, Bloomberg noted several hurdles for this new Chase Pay system to be adopted by buyers. One hurdle mentioned by Bloomberg is the fact based on Federal Reserve's study, that only 17% of smartphone users in the U.S. made a purchase using mobile payment. Another hurdle is the slow pace of acceptance in stores. In order to encourage merchant to use Chase Pay, JPMorgan Chase offers series of discount for merchant.
Although it has secured a deal with a major retailers consortium, customers will have to wait for the JPMorgan Chase to apply the system in the mid 2016. Furthermore, current players in mobile payment is better equipped than JPMorgan in terms of technology implementation.