Chase Bank Takes on Apple Pay with CurrentC

| Analysis

JPMorgan Chase has its answer to Apple Pay: use CurrentC, but rebrand it as Chase Pay. Instead of supporting a mobile payment system that relies on NFC, Chase decided to go with the boondoggle that's backed by Walmart.

Chase hops on board with MCX's CurrentCChase hops on board with MCX's CurrentC

CurrentC relies on apps customers must download to their smartphones, and on-screen barcodes retailers must scan to process transactions. The system ties directly to user's bank accounts, and Chase said it will auto-enroll all 94 million of the cards it has issued.

It's interesting that Chase would choose to partner with CurrentC because the platform was launched as a way for retailers to avoid paying credit card transaction fees to banks. CurrentC's founding members have been so hostile towards credit card fees that former Walmart CEO Lee Scott told reporters when asked if he thought the platform could succeed, "I don't know that it will, and I don't care. As long as Visa suffers."

CurrentC was announced in 2012, but still hasn't launched. Merchant Customer Exchange (MCX), the company behind the platform, had hoped for a 2015 rollout but now is shooting for some time in 2016. In contrast, Apple Pay has been available for a year and will have an even larger head start when CurrentC eventually does make it to retailer's check out counters.

Apple Pay isn't the only competition Chase and CurrentC are facing. Google Wallet—now Android Pay—is the Android OS equivalent of Apple Pay, and is equally convenient because it relies on NFC wireless transaction technology as well.

CurrentC is also dealing with the loss of some of its partner members. Best Buy already announced its support for Apple Pay and Target plans to offer in-store Apple Pay support, as well. Rite Aid now supports Apple Pay and Android Pay, too.

For Chase, the deal is an opportunity to be part of more retail transactions. The real winner, however, is MCX because it gets an endorsement from Chase along with millions of auto-registered accounts.

When CurrentC does launch, Chase and MCX need to find a way top convince shoppers to install their app and actually use them in stores. That's going to be some trick considering Apple Pay and Android Pay don't require special downloads and use NFC. Good luck with that, Chase.

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Comments

geoduck

The system ties directly to user’s bank accounts, and Chase said it will auto-enroll all 94 million of the cards it has issued.

So, take a bad, insecure system that’s already been hacked, and autoenroll most if not all of your customers. WHEN the system is hacked again and all of the user data, that Chase put in without the customers consent is stolen and used fraudulently, who will be liable? Not only the users will go after Chase, I suspect the vendors that are ripped off would have a case.

Stupid is as stupid does.

snaab4

Am I missing something here?  I have a Chase credit card aligned with Apple Pay since day one.

webjprgm

I also have a Chase credit card. It is Visa, and Visa works with Apple Pay. I hope that continues to be the case. If not, good thing my second credit card company has joined Apple Pay in the meantime so I can switch the primary card if I need to.

Black_Dog

I work in the credit card industry and noticed a couple of errors:

1. “It’s interesting that Chase would choose to partner with CurrentC because the platform was launched as a way for retailers to avoid paying credit card transaction fees to banks.”

The fees that CurrentC seeks to bypass are interchange fees charged by Visa and MasterCard, not by card issuing banks.

2. “CurrentC is also dealing with the loss of some of its partner members. Best Buy already announced its support for Apple Pay and Target plans to offer in-store Apple Pay support, as well. Rite Aid now supports Apple Pay and Android Pay, too.”

Best Buy, Target and CVS/Rite Aid are all very much still part of the MCX consortium even though they have announced plans to accept Apple Pay. They will be accepting CurrentC when it rolls out. Eventually most all merchants (in or out of MCX) will accept CurrentC, Apple Pay, Google Wallet, Android Pay, etc. in addition to cash, checks and conventional credit cards, so the announcements by these companies to accept Apple Pay is hardly the betrayal that it is hyped up to be in the press.

Despite being late and a couple of generations behind technologically, CurrentC is likely to be at least a modest success due to the sheer number of merchants that can accept it without substantial upgrades to their POS equipment and because CurrentC will work equally well on older smart phones that do not have the latest OSes, Touch ID or NFC hardware. Right now less than half of the the iPhone’s in circulation can even use Apple Pay, but all of them will all be able to use CurrentC when it launches. That isn’t a long-term advantage, but it will help CurrentC gain a beachhead.

Remember, the Macintosh was defeated in the marketplace by an inferior product because MSDOS had the initial backing of IBM, so don’t so quick to rule CurretC out.

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