The physical use of credit cards is gradually headed in the direction that US Airways headed about a fortnight ago. Wake up! We’re headed for an era of ‘X-Pay’.
I say this having read that JPMorgan Chase (JPM) would roll out Chase Pay in 2016.
Apple Pay is the most prominent competitor, with the service expanding rapidly internationally.
Going by the reviews of tech analysts, it’s safe to say that they are not optimistic about the chances of Chase Pay. The top issue with Chase Pay is that it uses QR codes to process payment — unlike Apple Pay, which uses NFC technology to process payment. By implication, using Chase Pay would require the longer process of unlocking the phone, opening the Chase Pay app, probably generating the QR code and then scanning it.
On the other hand, with Apple Pay and the like, you only need to take the phone close to an NFC-supported device and tap to pay.
With today’s consumers wanting everything done faster than they can be feasibly done, this is truly a big red light.
However, that doesn’t tell the entire story. There are certain advantages that Chase Pay holds over Apple Pay too.
Apple Pay Is Limited to iStuff and Apple Can’t Stop Chase Pay
While Apple Pay presents an easier payment method, we have to remember that it is limited to iStuff.
And it’s not even all iStuff. Per the APPL website, Apple Pay is usable on iPhone 6 or iPhone 6 Plus and later and iPad Air 2 or iPad mini 3 and later. Older iStuff users would need the Apple Watch, which certainly comes at an extra cost. Truth is, most of the iStuff out there is older, meaning the adoption of Apple Pay won’t be as fast as most people say.
On the other hand, JPM says Chase Pay will be available on almost all smartphones.
One could say if Chase Pay would be a big competitor for Apple Pay, can’t Apple simply remove it from its app store like it did with some bitcoin processors in the past? It can’t be that easy.
We have to remember that Apple Pay is only possible because banks allow it. With JPM’s move, we can expect more banks to follow suit. In the end, the mobile payment space would be like an ecosystem where most of the competitors rely on each other for survival — especially platform providers like AAPL and banks. So barrier to entry into the mobile payment space would be almost nonexistent.
Overall, the industry will be ruled by how much incentive mobile payment providers can offer. JPM is already promising to help merchants cut costs.
JPMorgan’s Position as the U.S. Number One Bank Shouldn’t Be Underestimated
For what it is, JPM’s customer base makes it an automatic number one in the mobile payment space — JPM has 50% of US households as customers.
When the service starts next year, about 96 million JPM credit, debit and prepaid cardholders will have access to Chase Pay. That’s a huge number to start with. And it promises a good conversion rate.
Apple Pay is sure easier to use, but in reality, JPM has more of the expertise to make this work.
Mobile payment stuff apart, though, with both JPMorgan and Apple occupying a leading position in their respective industries, I’d say both JPM and AAPL are a buy.
As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned security.