Will the official arrival of a JPMorgan Chase's new mobile wallet, Chase Pay, be a new mobile payment threat for credit unions or the catalyst for new opportunities? Two experts disagree.
U.S. mobile proximity payments are ready to grow significantly over the next few years, according to eMarketer. The firm reported mobile payment users totaled 23.2 million in 2015 and will triple to almost 70 million by 2019.
While mobile payments are becoming more popular, they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants.
For mobile wallets, the problem is ongoing lack of demand. After a promising number of initiatives, adoption rates are lower than expected. Much of the fault lies within the fragmented marketplace that features an assortment of payment, technologies and devices.
A turning point could come with JPMorgan Chase's wallet Chase Pay. Richard Crone, CEO/Founder of San Francisco-based Crone Consulting, suggested the launch of Chase Pay, scheduled for mid-summer 2016, will be a seminal moment in mobile payments, more powerful than the bank's launch of mobile remote deposit capture.
"The real future value of mobile payment will come from personalized, continuously responsive, in-context services added to the mobile wallet," Crone said. "The greater ongoing ROI will come from new customized functionality that was developed dynamically by machine learning algorithms on a highly individualized basis for each enrolled mobile wallet user."
Crone indicated with the Chase's capability of issuing, accepting and acquiring assets on both sides of electronic card equation, combined with ChaseNet's on-us processing terms and conditions secured by its 2013 deal with Visa, Chase Pay could essentially set up a closed-loop network for processing its own on-us mobile payment transactions.
In addition, Chase can create new revenue streams from the data it holds, worth $300 per active wallet user per year, Crone pointed out. This could happen by populating bank originated debit and credit accounts inside retailer shopping apps and mobile wallets.
Not everyone thinks Chase Pay will affect credit unions.
"Based on what we know about Chase Pay to-date, we are not anticipating that it will have a huge impact on credit unions as this wallet is strictly limited to Chase cards," CO-OP Financial Services VP of Product Development Lois Hansen said.
Hansen also pointed out, "One advantage of Chase Pay's use of QR codes on phones is that it should work with most Android and Apple phones. Android Pay and Samsung Pay work only on Android devices and Apple Pay works only on iPhones. However, paying using a QR code is often not quite as easy as tap-to-pay methods like Apple Pay, Android Pay and Samsung Pay."
She added that merchant adoption, both in-store and online, remains to be seen.
"Today, the perception is that only a few merchants are accepting Chase Pay, which will likely limit adoption," she said.
Read more about how Chase Pay and mobile wallets could affect credit union payments in the June 1 print issue of Credit Union Times.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
