JPMorgan Chase & Co. said on Monday it will soon launch its own competitor to Apple Pay that will allow shoppers to make purchases in stores using their smartphones. The mobile app, known as Chase Pay, has already won the endorsement of a major group of merchants.
Many financial executives believe "digital wallets" will one day be consumers' preferred way to pay for everything from milk and eggs at the supermarket to a rental car at an airport. No clear front-runner has emerged in the mobile-payments business yet.
Chase, the largest U.S. bank, believes Chase Pay has one key advantage: the caliber of retailers it has brought on board, Gordon Smith, chief executive of the bank's consumer business, told Reuters. Chase has signed a deal with the Merchant Customer Exchange, a group of major retailers including Wal-Mart, Target, Best Buy and Shell, to accept payments through the bank's technology. Retailers included in the Merchant Customer Exchange (MCX) ring up more than $1 trillion of sales per year and have over 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," Brian Mooney, CEO of MCX, said in a statement.
Rivals like Apply Pay, which Apple launched in September 2014, have struggled to sign up retailers to accept their payments. In June, Reuters interviewed the top 100 U.S. retailers and found that two-thirds said they did not plan to accept Apple Pay this year. However, an Apple executive announced earlier this month that Starbucks, KFC and Chili's restaurants have signed up, and Best Buy is now accepting Apple Pay in all of its 1,400 stores nationwide.
Chase signed up MCX mainly by promising to cut retailers' costs, Smith said. Whenever a consumer pays for something with plastic, the retailer pays fees to banks and credit card networks to process the transaction. Chase is willing to accept a lower fee for Chase Pay transactions than for other transactions, and hopes to make up the difference by getting more volume over its network, Smith said.
"As merchants give us more business, we will give them better pricing," Smith said in an interview.
Chase expects to market its product heavily in the middle of next year.
Chase Pay will initially work for consumers that already have Chase credit, debit, and prepaid cards, Smith told Reuters. The app will work on Apple and Android-based phones.
Phones aren't the only devices that could store your money. MasterCard on Monday introduced a new program that would allow practically any device — even smart fashion accessories — to make mobile payments.
"This program eliminates the boundaries of how we pay by delivering a secure digital payment experience to virtually anything — rings, fitness and smart bands, car key fobs, apparel, and whatever comes along next," said Ed McLaughlin, chief emerging payments officer at MasterCard.