Competition is heating up in the mobile payment industry. Various banks launch their own initiatives to remain relevant. For Chase, its proprietary mobile payment application is being canned soon. Chase Pay will be linked up with Samsung Pay, rather than try to oppose the payment giant.
This deal is not entirely unexpected. Chase Pay has never been all that popular, simply because it offers nothing unique. As such, the bank has decided to let clients use Samsung Pay’s MST technology. This will allow users to pay with Chase Pay by tapping a payment terminal.
Chase Pay Bows to the King
Users who link Chase Pay to Samsung Pay will receive an added incentive. They will earn both Samsung Rewards points and Chase Ultimate Rewards points. This latter will only apply when using an eligible Chase payment card. It is an excellent example of how proprietary apps for mobile payments will always be less successful when issued by banks. It is not a solution consumers are actively looking for.
This was not an easy decision by Chase. The bank invested $100m in its own QR code-based application. Most of that investment needs to be written off as a net loss, as consumers flock to more popular wallet solutions. Despite building a network of retailers capable of accepting Chase Pay, it never achieved any real long-term success.
It will be interesting to see how things evolve in the world of mobile payments. Other banks might need to take a very similar approach in the very near future. Mobile payments is a very competitive industry, albeit one that is difficult to enter as a bank. Technology giants have a firm grip on this industry first and foremost.