Page 34 - Pay Magazine s2014

digital money
Will Bank-Backed M-Wallets Win?
be a game changer for mobile pay- ments, as the U.S.’s largest bank by assets has a few key advantages over competing nancial institu- tions. When Chase Pay launches— expected in the fourth quarter—it will become available to the bank’s more than 90 million account holders. That means one in every two U.S. households will have the ability to use Chase Pay, Crone says. “The launch of Chase Pay
will be a seminal moment in mobile payments,” he continues.
Chase Pay presents an attractive proposition for merchants, too. Because of a 10-year partnership made with Visa in 2013, resulting in the creation of the Chase Merchant Services platform, Chase can neg- otiate card-acceptance pricing and certain operating rules directly with merchants. That means merchants won’t be beholden to Visa’s inter- change schedule, nor will they face network fees, merchant processing fees or fraud liability.
Chase Pay also will rely on token- ization technology and function as a cloud-based mobile wallet, and it won’t require NFC or any necessary hardware. “One of
the ways Chase Pay is unique
is that we’ve started with mer- chants,” says Chase spokes- person Edward Kozmor. “By solving merchant concerns rst, such as the cost of payments and merchant fraud liability,
we create an incentive for merchants to encourage their customers to use Chase Pay when it becomes available.”
The launch of
Chase Pay will be
a seminal moment in mobile payments. ... They’re gunning to take away cus- tomers from the banks and credit unions that don’t have this capability, and they’re going
to use it to move the market the same as they did with mobile remote deposit capture.
—Richard Crone, Crone Consulting LLC
Already, merchants have begun actively promoting Chase Pay. Earlier this year, Starbucks agreed to incorporate Chase Pay into its
wildly popular mobile payments app, while Shell announced over the summer that it would start accepting Chase Pay at its U.S. gas stations. And Chase’s deal with MCX could prove to be a major coup for both the bank and the retailer consortium, which includes more than 100,000 member locations. (See sidebar on page 34.)
Crone compares Chase’s play
for the mobile wallet space to
its launch of mobile remote deposit capture four years ago. Every time Chase ran its national ad promot- ing the service, the bank opened up 10,000 new accounts. Chase Pay could yield similar results,
he suggests.
“They’re gunning to take away customers from the banks and credit unions that don’t have this capability, and they’re going to use it to move the market the same as they did with mobile remote deposit capture,” he says.
Strategies Vary
More nancial institutions are getting into the mobile payments game, whether that means launch- ing a proprietary wallet or incorpo- rating third-party wallets into an existing app—or both.
Capital One’s platform enables con- sumers with Capital One credit and debit cards to use an NFC-enabled Apple or Android device to make contactless payments. As the rst U.S. bank to enter mobile pay- ments, Capital One encountered
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