Could Chase Pay Be the New Merchant Mobile Wallet?

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The news that Shell Oil has agreed to accept Chase Pay at more than 6,000 gas stations couldn't have come at a more interesting moment.

Shell will join Starbucks as the first merchants to sign on with Chase Pay, the mobile wallet being developed by JPMorgan Chase, adding momentum for the concept during the same week that another high-profile mobile wallet with broad merchant participation, called CurrentC, announced its sunset date.

Later this year Shell will begin accepting Chase Pay at its gas pumps, in its stores and in-app, with built-in support for Shell's Fuel Rewards loyalty program, the companies said in a June 9 press release.

The advantage for merchants participating in Chase Pay is a lower-cost transaction-processing model with no fraud liability, leveraging Chase's dominant market share in both card issuance and merchant services. Chase has more than 90 million credit and debit cards in its U.S. portfolio.

But it's the support Chase Pay provides for merchants' loyalty programs that sets it apart from other mobile wallets, most of which either ignore loyalty or favor a loyalty program developed by the vendor. Merchants have long said they prefer to keep their existing loyalty programs.

The nearly defunct CurrentC app was developed by the Merchant Customer Exchange (MCX), which launched in 2012 with the support of most of the nation's largest retailers, including Walmart, Target and ExxonMobil. MCX this week said CurrentC will be officially shut down at the end of this month, following a yearlong pilot in Columbus, Ohio.

Shell is a member of MCX, which is also a Chase Pay partner, the release noted.

By signing up with Chase Pay at the same time CurrentC is shutting down, Shell could be setting the pace for other merchants that may have felt abandoned by the fate of the CurrentC pilot.

Though it's still early in Chase Pay's development cycle, the concept recently went live with a handful of e-commerce merchants including 1-800-Flowers, eBags and Gerber Life Insurance Co., a Chase spokesperson said.

Chase Pay operates as a payment option on those websites; at the point of sale, it can be one of the payment choices within a merchant's app and also accessed through a stand-alone Chase Pay app.

Initially Chase Pay will use QR code technology at the register and a different technology at the pump, the spokesperson said, without providing further specifics.

There may be no direct transition from CurrentC to Chase Pay, but the timing shows how much is in flux right now as merchants sort out their mobile payments strategies, said Tim Sloane, vice president of payments innovation at Mercator Advisory Group.

"It certainly appears that MCX realized it was spending far more than it would ever save in its effort to build a third network," Sloane said. "Along comes Chase Pay, presumably offering lower rates and integration with merchant loyalty programs, and perhaps that was enough to take the wind out of the [CurrentC] sails."

Starbucks said it plans to incorporate Chase Pay into the Starbucks mobile app this fall, enabling consumers to pay and continue earning rewards as usual.

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