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Why Mobile Payments Are Still So Hard for J.P. Morgan

J.P. Morgan has made numerous splashes to promote its mobile offerings, including a television spot featuring a ping-pong playing Serena Williams. But the payoff is yet to come.


Emily Glazer

Many U.S. companies from startups to Apple Inc. have struggled to gain traction in the fast-growing world of mobile payments.

The country’s largest bank is no exception.

J.P. Morgan Chase & Co., run by chairman and CEO James Dimon, has made numerous splashes to promote its mobile offerings, including a television spot featuring a ping-pong playing Serena Williams. But the payoff has yet to come.

Banks view mobile commerce as one of their biggest opportunities, but they still largely trail technology firms and non-banks such as Visa Inc. and PayPal Holdings Inc. Still, banks are pushing to expand offerings to have them in place for the day when the general U.S. consumer flocks to paying with their phone as much as millennial consumers have begun to do or those in other countries such as China.

J.P. Morgan’s newest focus is on Chase Pay, which is designed to make it easier for customers to pay with their smartphones in stores and online. The bank has spent about $100 million on it, according to people familiar with the matter.

While J.P. Morgan doesn’t disclose financial details about Chase Pay, a May survey from Bernstein Research ranked it ninth among U.S. mobile wallets with only 6% of online shoppers saying they’d used it in the previous year, a fraction of the 61% who said they used PayPal. 

The bank is now reframing its plans as more of a long-term play. J.P. Morgan executives still project that Chase Pay could at a minimum enhance its customers’ credit-card, debit-card and merchant relationships. Still, the app isn’t widely used yet and the rollout with merchants has fallen behind schedule, according to people familiar with the matter.

“We’re trying to get Chase Pay embedded in as many places as possible,” Mr. Dimon said at an industry conference in September. “We’ll see how it pans out.”

It’s a far cry from J.P. Morgan’s announcement of the product at a large financial-technology conference two years ago in Las Vegas. The payment app’s struggles also contrast with the rapid migration the bank’s customers are making to mobile for variety of basic banking functions like watching balances and depositing checks.

With payments, J.P. Morgan has been challenged by two factors: competitors have moved quickly while potential customers have moved slowly. Most Americans still prefer using their cards, along with cash and checks.

While Chase Pay works through the bank’s cards too, there hasn’t yet been enough of an impetus to switch, analysts say. “Customers aren’t out there asking for a new way to pay,“ says Brendan Miller, a principal analyst at Forrester Research Inc. “Too many of these players are focused on the payment, not the things that are going to drive the consumer to buy."

Other countries, notably China, have taken to mobile payments more quickly. There, payments are often integrated into text messages, and analysts estimate the size of the mobile-payments market is 30 times or more the size of the U.S. business.

In the U.S., rivals to J.P. Morgan have stressed other approaches, including Bank of America Corp. , which have avoided their own branded mobile wallets.

Meanwhile, J.P. Morgan joined a group of large banks in June in connecting their existing smartphone apps to an industry consortium that developed a money transfer network known as Zelle to compete with PayPal’s Venmo. That effort replaced large parts of J.P. Morgan’s earlier mobile payment effort, Chase QuickPay, which now works through Zelle, even though the bank still uses the QuickPay name.

The bank’s payment business, run by consumer-bank head Gordon Smith, is also competing with smartphone makers like Apple and Samsung Electronics Co. , and credit card networks like Visa and Mastercard .

“We said from day one that changing customer behavior would be tough,” J.P. Morgan spokeswoman Trish Wexler said, in regards to Chase Pay. “But we’re Chase, and our customers expect us to lean into the future and learn what we can now so we’re ready when they are.”

J.P. Morgan is laying the groundwork by signing on large retailers including Wal-Mart Stores Inc., Best Buy Co. and Starbucks Corp. J.P. Morgan initially announced other big retailers through an industry consortium, including Target Corp. , but didn’t roll out Chase Pay with some of them after the consortium dissolved.

Chase Pay faces even more competition than it has seen so far. Wal-Mart, while still accepting Chase Pay, has been developing its own parallel wallet dubbed Walmart Pay. In early 2018, stores including West Elm and Pottery Barn will start accepting both PayPal and Venmo for the first time. Meanwhile, a July survey from Morgan Stanley analysts found that PayPal was accepted at 377 of nearly 500 top online merchants while Chase Pay was accepted at only four.

In July, J.P. Morgan and PayPal announced a partnership slated to roll out in mid-2018 that will make it easier for J.P. Morgan customers to add cards from Chase Pay to PayPal’s app. The deal would also let the customers use Chase reward points to pay for goods and services through PayPal.

J.P. Morgan is sticking with Chase Pay, recently listing it as one of the technology investments where the bank expected “significant future benefits.”

“I would hope that you would expect as investors in this firm,” Mr. Smith said at a conference after the Chase Pay announcement, “that we would be trying to lead that next phase of the industry.”

—Peter Rudegeair contributed to this article.

Write to Emily Glazer at