Why Banks Are Launching Their Own Payment Apps
The next big competitor for Apple Pay may not be Android Pay or Samsung Pay after all. Instead, It could be one of the homegrown mobile payment solutions some banks are developing. Last week, Capital One added a new mobile payment feature to its Android app, becoming the first U.S. bank to release tap-to-pay functionality in mobile app. Likewise, earlier today Chase introduced its digital wallet service named Chase Pay, which allows users to pay with a QR code within the Chase Pay app. Chase partnered with MCX, the consortium of retailers led by Walmart, to get Chase Pay accepted in MCX’s member stores, where the Chase customers will have to use Chase Pay inside the CurrentC app instead. Chase Pay is said to be aiming for a mid-2016 launch.
Banks have long enjoyed a stranglehold on payment solutions, either with cash or cards. They faced some challenges from digital payment solutions such as PayPal, but have remained largely unfazed in monopolizing the way people make purchases in the real world. But the recent rise of mobile payment, made viable by the proliferation of smartphones and kickstarted by the introduction of Apple Pay last year, has threatened to undercut banks’ market dominance in consumer payments. Therefore, it’s no surprise that some banks are now scrambling to come up with their own mobile payment solutions, despite their low profit margins. However, if Chase Pay’s confusing UX design, complicated by its affiliation with MCX, is any indication, the banks still have a long way to go before their products can truly compete with the likes of Apple Pay.