Mobile Payments

Chase Pay’s Trouble With Traction

According to news from The Wall Street Journal, J.P. Morgan Chase (JPMC) is the latest big name with big mobile payments ambitions and bona fides to back them up — and has run headlong into the same mobile payments ignition problem: Consumers are just not that interested.

It is not, the WSJ noted, for lack of effort on the part of Chase to invest in Chase Pay. The bank’s mobile payments offering is designed to make it easier for customers to pay with their smartphones both in physical and digital retail locations.

JPMC has spent about $100 million on its mobile payments offering. With roughly 100 million customers and about 18 percent of all credit card debt in the U.S., it certainly went in with a large enough base of potential users already well-accustomed to paying with Chase. The company even had a commercial with Serena Williams playing ping pong to juice interest.

But what it doesn’t have — according to the numbers — is customers who are interested in actually using the service. Despite the enthusiastic uptake of any number of other mobile banking functions offered by Chase, Chase Pay has been relatively inert so far.

J.P. Morgan doesn’t directly disclose financial details about Chase Pay, but a May survey from Bernstein Research gave it a ninth place ranking among U.S. mobile wallets, with only 6 percent of online shoppers reporting they’d used it. PayPal — the holder of the No. 1 spot — had a 61 percent use rate. Visa Checkout — in the second spot — was reported to have 20 percent usage, with Amazon in the third spot at 16 percent.

Apple Pay and Android Pay barely cracked double digits with 12 percent and 11 percent, respectively.

“We said from day one that changing customer behavior would be tough,” J.P. Morgan spokeswoman Trish Wexler said, in regards to Chase Pay. “But we’re Chase, and our customers expect us to lean into the future and learn what we can now so we’re ready when they are.”

And, in the meantime — and perhaps in an attempt to get those customers a bit more ready — Chase is recentering its activity and more actively framing out a longer term, more partnership-based model for its mobile payments platform.

“We’re trying to get Chase Pay embedded in as many places as possible,” JPMC CEO Jamie Dimon said at an industry conference in September. “We’ll see how it pans out.”

Those embeds include some very large merchants — Walmart, Best Buy, Starbucks and Target, for example. In July, Chase and PayPal announced a partnership slated to roll out in mid-2018 that will make it easier for Chase customers to add cards from Chase Pay to PayPal’s app. The deal would also let the customers use Chase reward points to pay for goods and services through PayPal.

But, the WSJ reported, even those cooperative relationships are still undergirded with competitiveness in the mobile arena.

Walmart accepts Chase Pay but is also pursuing its own mobile wallet effort in Walmart Pay, which it is understandably somewhat more interested in pushing than Chase’s. PayPal’s Venmo is beginning to creep into the major merchants of the physical world — in 2018, West Elm and Pottery Barn will accept both PayPal and Venmo for the first time.

And speaking of PayPal — it didn’t get to that 61 percent idly or by accident. PayPal is the longest player in the digital payments game — and, according to the latest count by Morgan Stanley, is accepted at 377 of nearly 500 top online merchants.

Chase Pay was accepted at only four.

But Chase Pay is pushing forward, recently referring to it as one of the bank’s technology investments that would show “significant future benefits.”

Time will tell.

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