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JPMorgan Chase & Co. on Monday unveiled its Chase Pay mobile wallet and said the product will begin rolling out in the middle of next year. Chase also said its new wallet will be accepted at merchants belonging to the Merchant Customer Exchange LLC, a retailer-controlled consortium that has been testing its own wallet, CurrentC, in Columbus, Ohio.
The wallet responds to merchant complaints about the cost of card acceptance, said Chase chief executive for consumer and community banking Gordon Smith while making a presentation to a crowd of thousands of payments executives. Chase Pay will levy a single, fixed fee to merchants and will eschew card-network interchange and processing fees, Smith said, without specifying the fee. He added the fee would decline as a merchant adds volume.
In speaking at the Money2020 fintech conference in Las Vegas, Smith also did not explain how Chase will process Chase Pay transactions without network fees or how transactions will flow outside existing merchant-acquirer connections. Presumably, the bank will rely on a closed-loop network it began building two years ago that links its cards directly with accepting merchants. While Chase is a Visa Inc. issuer, its network stands apart from Visa and is part of the bank’s Chase Commerce Solutions unit.
Chase is a potent contender in the developing wallet wars. Its 94 million card accounts generate 12 billion transactions annually, according to Smith, and it is the country’s largest credit and debit card issuer by volume. All 94 million accounts will be pre-loaded into Chase Pay wallets, Smith said, for use in-store, in-app, and online.
Chase Pay will also bring a new payment method to CurrentC, which has offered so far automated clearing house transfers and payments on member Target Corp.’s RedCard proprietary credit and debit cards.
Some 40 retail companies representing 70 brands belong to MCX, which was formed in part to help its members reduce card-acceptance costs. “We’ll be accepted everywhere CurrentC is accepted,” Smith said about Chase Pay. MCX merchants represent about 100,000 outlets. “This is a significant milestone, not just for MCX and Chase, but for mobile payments overall as the industry continues to take shape,” said MCX chief executive Brian Mooney in a statement.
Chase said Chase Pay transactions will be tokenized and will allow merchants to incorporate loyalty programs. It will link to the point of sale via barcodes–the method CurrentC depends on–and will also offer single-click checkouts for online and in-app transactions and will work on most smart phones.
