As mobile payments expand, Chase Pay seeks to differentiate

Chase has been fairly quiet about Chase Pay, and is taking a small guy approach that focuses on adding value through merchant partners. After giving a year's warning about its imminent launch and then finally going live last October, it still feels very under the radar. It’s not marketing on social media. It’s not pushing its mobile banking users to the Chase Pay app. It’s not drawing any attention to itself. “We purposefully have been saying we want to mirror what some of the best apps out there have done and think like a small guy a little bit in that we want get the product right and roll it out as it’s ready to the right audiences,” said Dina DeMerell, chief marketing officer at Chase Pay. “We’ve been rolling out in a measured way as features and functionality and merchants become available." Today, Chase Pay’s largest merchants partners include Best Buy and Starbucks -- both of which let users order and pay in advance. Shell stations will join the network later this summer, according to the bank, as well as HMS Host, Atom Tickets and Parkmobile later this year. Higher end (or just “fancy”) restaurant chains in the Level Up network -- with whom Chase Pay partnered in December -- have been added too now, like Sweetgreen, By Chloe, Georgetown Cupcake and Fika. Earlier this year, it acquired MCX, a retailer consortium with members like Walmart and Target. However, while the main players are playing for customer convenience -- why fumble through a wallet for a piece of plastic when a customer can just tap the device that’s probably already in hand? -- Chase is looking to create new value propositions for customers: offers, discounts, things that motivate a person to actually break the old habit of paying by card and creating a new habit: paying by phone. Through the app, available only to Chase debit and credit card holders, customers can order ahead from participating restaurants, receive discounts on their order and pay for it before they arrive to pick it up; they can pay for things using Chase Ultimate Rewards points or cashback rewards; in Denver and Boston, Chase Pay is testing a feature that will allow users to save money by rounding down their bill whenever they order ahead. “Order-ahead is a feature that can get people to use to because it actually improves the life of the customer,” said David True, a partner at PayGility Advisors. “Just switching from swiping to scanning doesn't change a customers life or make the experience any better." And even if the food companies have their own apps, this gives users an incentive to use Chase instead. Since Chase announced the Pay product in 2015, Samsung Pay has added in-app payments and location-based discounts and offers, Facebook Messenger added support for group payments between friends, Starbucks introduced an order-ahead capability in its app, China’s Alipay and WeChat both arrived in the U.S. Last week, Apple Pay revealed its digital debit card and peer-to-peer payment function through iMessage. This week Zelle is coming for Venmo users through their mobile banking apps. "Other apps have been successful and done best when they grow up slowly and get it right first, before they start marketing," DeMerell said. However, competing with other mobile pay products isn't Chase’s game. Similar to Apple’s p-to-p play, Chase Pay adds value to its 26 million existing Chase customers that are digitally active on the mobile banking app. “Customers are going to decide what they want to use most,” DeMerell said. “Right now it’s important we offer a Chase solution anywhere a customer might go." On some level, the Apple, Samsung and Android Pay products are in direct competition with Chase Pay. Chase is playing in that space too. “We’re supporting those products actively, we want customers to select Chase as their payment method for apple or Samsung pay. If that’s the product the customer wants to use we want to make it easy for them to connect with Chase,” she said. After all, the merchant appeal for providing Chase Pay as a customer payment option is that they pay lower transaction fees on Chase Pay purchases than on those made with other payment methods -- like the Apple, Samsung or Android Pays. “For all of these players trying to replace plastic at the point of sale are doing it, it’s an add-on,” said True. “[It’s] hardware in Amazon’s case, probably in Samsung’s too; collecting data in Google’s case. The merchant doesn't want to turn away any form of payments. Chase isn't going to push it on merchants because how they make money on merchants is otherwise. They're not going to push people hard to use this Chase Pay app.”