SAMSUNG AND CHASE TEAM UP ON MOBILE: Samsung Pay, the tech company’s mobile wallet, is partnering with Chase Pay, the bank’s proprietary mobile payment service. Now, eligible customers — those with both Chase-issued cards and Samsung Galaxy phones that support Samsung Pay — can use the Chase Pay app to pay with Samsung Pay’s contactless technology rather than a QR code, according to a company press release.The partnership helps solve one of Chase Pay’s biggest problems. Chase is a top US issuer — 52% of respondents to a May 2018 Business Insider Intelligence survey noted that they had a Chase credit card, making it the most popular option. But adoption of Chase’s mobile wallet has been particularly low, with just 6% of respondents to a 2017 Bernstein Research survey having used it. That’s likely partially because it’s tough for consumers to use. QR code payments aren’t favored by US consumers because they often add friction to the payment process — they don’t always scan and usually require multiple steps. And Chase’s merchant acceptance network remains low: The wallet counts a handful of grocery, gas, and retail partners, but lacks a wide network. By partnering with Samsung Pay, and opening up its network to virtually any merchant that accepts magnetic stripe or NFC-based payments, Chase Pay just became considerably simpler to use and form habits around, which could boost results in the long run.
And the partnership could help Chase Pay in the long term for two key reasons.
- It reduces fragmentation, which could encourage adoption. High fragmentation in the mobile wallet space has contributed to lower-than-expected mobile wallet adoption among US consumers, because it adds enough friction to push users back to more familiar payment methods. By sharing credentials, Samsung Pay and Chase Pay are limiting users’ choices and making the onboarding and first payment experience simpler for customers, which could drive previously uncertain users to the wallet.
- And it encourages users to come back, in turn boosting habit formation. Even once users adopt a mobile wallet, it’s important that the wallet encourages users to return. Samsung Pay does this well — its Samsung Rewards program is responsible for the wallet’s 49% user increase in the year since it launched, and the wallet counts the highest engagement among the three phone-based wallets. The new partnership takes that a step further, though, by offering consumers access to Chase rewards and incentives on top of Samsung Rewards. That could prompt habit formation and boost Chase Pay’s performance, setting the stage for a model that could help Chase become a mobile wallet leader while growing card spend for the bank.