Why JP Morgan Is Struggling With Chase Pay
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What is Chase Pay and why is JP Morgan promoting it?
This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm Anne-Marie Hurtoli in New York. J.P. Morgan, the nation's largest bank, is struggling to bring customers over to Chase Pay, its latest mobile payment project. Despite spending tens of millions of dollars on Chase Pay, J.P. Morgan is lagging behind other banks and tech companies. Here now to talk about why the bank is having so much trouble is Wall Street Journal reporter Emily Glazer, joining us via Skype from Los Angeles. Emily, aren't all banks playing a little bit of catch up with mobile payment apps like Venmo and PayPal?
Yes, definitely. This is an area that all banks, including JP Morgan, but even other firms are having trouble with. The issue is that consumers, folks like you and me, are not completely tied to mobile payments yet. You know, stuff like Apple Pay has yet to really take off. And that's where something where the banks are putting out different products and services is. They're trying to get out ahead of it, but the consumers aren't even ready for it yet.
I understand that younger people are signing on to mobile banking a little bit earlier, especially apps like PayPal and Venmo, where they can transfer money. But what's holding other customers back? Is it a matter of the technology or of old habits, like going to an actual bank, for example, dying hard?
It's both. And there's actually a couple things at play here. So mobile banking means so many different things these days. There's peer-to-peer payments, like what you were talking about, and that's services like Venmo that's gotten really popular with millennials. Chase even has a service called QuickPay that's been folded into this new network that a bunch of banks signed on to called Zelle. So a lot of folks might be seeing Zelle, it's Z-E-L-L-E, advertised on their banks these days. And that's the bank's attempt to compete with PayPal on peer-to-peer payments. For instance, if you are sharing a taxi with somebody or you go out to dinner with or you owe someone money and it's a lot easier than getting out that $5.52 or whatever the amount might be.
Then there's this whole other part of mobile banking, and it's usually referring to mobile payments. And that's where things like Apple Pay, Samsung Pay, Walmart Pay, Chase Pay, it's all about mobile payments with a merchant. So in many cases, that could be if I decide I need to buy something from a retailer, say, West Elm, I'm getting furniture and I want to use my phone to pay for it instead of actually getting out a credit card or even cash. In this situation these days, you can use Venmo to soon do that. And you've also been able to use Apple and a bunch of retailers as well and these other services. That's where banks like Chase, even though they're trying to get ahead of it, have been falling behind.
Is it also a factor that JP Morgan and other banks didn't begin in the online or digital space like some of the other apps we've been talking about?
Why aren't consumers fully adopting mobile payments like Apple Pay and Venmo?
Well, banks have been online and on mobile for longer than we would probably imagine. I think part of it is that as consumers, we're always looking for the easiest way to do things. These days, it might be the easiest app. In the past, it could have been the easiest website. You know, as technology changes, we adapt. And oftentimes, technology firms or smaller companies are just better at things like design and user research than other firms are. So, for instance, it's no secret in the banking world that perhaps they have the plumbing down right. But as one of my sources had said to me, you know, banks are not known for designing the sinks. They're good at the plumbing. So the design factor, and that's sort of how we as users would use different applications and sort of flock to what's easy.
That's something that the banks aren't as good at and something that tech firms are usually better at or even smaller startups that are really nimble and can move really fast and do, you know, make changes very easily. So, you know, banks have been putting a lot of money into technology for quite some time.
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