JPMorgan Chase (NYSE: JPM) has won a major victory over Apple (NASDAQ: AAPL) in the payment app wars. The world’s largest retailer Walmart (NYSE: WMT); which has refused to accept Apple Pay, will start accepting Chase Pay next year.
Starting in 2017 customers will be able to use Chase Pay at more than 5,000 Walmart and Sam’s Club Stores in the United States, a Chase press release indicates. Chase users that do not want to wait until then can use Chase Pay through Walmart’s, Walmart Pay app right now.
Chase Pay can also be used to pay at Walmart.com, the press release indicates. Walmart is also planning to start processing payments through Chase’s closed loop payment system Chase Net. This makes Walmart one of the first brick and mortar stores to accept Chase Pay which can currently be used at various websites.
A Major Setback for Apple
This is a major setback for Apple; and Alphabet’s (NASDAQ: GOOG) Android Pay, because Walmart has refused to take those solutions. It is also a major setback for Near Field Communication, or NFC; the wireless technology used in Apple Pay and Android Pay.
An NFC payment app uses a wireless signal to directly access a retailer’s payment system via the cash register. Walmart Pay and Chase Pay rely upon Quick Read or QR code. Using that system the phone’s camera takes a picture of a bar code on the register that allows the phone to access a payment system via the customer’s wireless plan.
Why Walmart is willing to Take Chase Pay but Not Apple Pay
Walmart is probably more willing to work with Chase Pay because it creates an added layer of security. Both NFC and QR code based systems protect customers by generating a unique token for each payment; that makes it hard for bad guys to replicate account information.
QR takes that one step further by creating a unique image that hackers would also have to duplicate. It also lacks a wireless signal that can be intercepted and keeps the payment transaction out of the retailer’s system. That means the customer’s phone is not accessing the retailer’s system directly. Instead the transaction takes place in a separate system such as Chase Net.
Customers can already use Walmart’s own payment option; Walmart Pay, at the retailer’s stores. Walmart Pay went live over the summer creating a payment solution rivaling Apple’s in size.
Chase Pay is currently available to holders of Chase bank accounts, credit cards and debit cards. At the moment it can only be used at a handful of online retailers and in Walmart Pay.
There are plans to roll Chase Pay out at other major retailers but they can have not yet been identified. Although the might include other American retail giants such as Costco Wholesale, Kroger and Target; all of which have refused to accept Apple Pay. Several of those retailers including Walmart participated in Current C an effort to create a payment application that collapsed in June 2016.