Payment Wallets

By pjain      Published March 11, 2021, 1:53 a.m. in blog Invest   

Mobile Wallets Market structure and Technology

Contactless payments still small percent of all Payments

Apple as the leader with its NFC chip (pulled out of most Androids after 2012) by 2015 claimed Apple Pay accounted for two out of every three dollars spent in Contactless payments in the USA.

NFC chip for tap or Contactless - Much simpler

With NFC-based payments, users don’t have to launch an app – they just hold their phone near a supported terminal without even unlocking their phone or even faceid. Then it does the whole similar mobile phone authentication and backend terminal validation.

QR-code did not get accepted in the USA

But QR-code based technology like that from Chase Pay requires users to unlock their phone, find and launch MCX’s CurrentC app, display the QR code, and wait for it to be scanned. Then it does the whole similar mobile phone authentication and backend terminal validation.

Privacy Issues

Apple Turns the Screws - "Apple is Safest"

Apple has taken the pulpit proclaim the need for secrecy, privacy, etc. Obviously this plays to its entire walled-garden approach. - user privacy compared with its competitors, - Forcing restrictions on IOS apps, even when implementing its Google search service - refusing to unlock users’ phones even when requested by law enforcement - Unclear how when developing Apple Pay.

Retailer Networks Suspect!

As a pro-retailer solution, merchants have the advantage of a network that includes no network or processing fees and no merchant fraud liability. But they’re also getting shoppers’ data – something that today’s more privacy-minded consumers are fighting back against.

Crowded Online Checkout

  • Paypal thrives with 70% presence as a checkout button.

Visa, Mastercard and American Express have been decommissioning their individual pay buttons and combining forces on a new online checkout option as they struggle to match PayPal’s popularity.

In contrast Chase Pay had to shut down as it got to only 1% of online checkout options.

Mobile Payments and Wallet Key Factors

Add Credit cards into the Wallet

Add Loyalty Cards into the Wallet

Deeply Support Retailer Loyalty Program

Payment system should work on nearly all smartphones

  • This is not true for Apple Pay which is restricted to iOS only.
  • Google changed Android Pay name to Google Pay
  • Chase Pay was supposed to work on all smartphones

Work with Extensive PIN

Emulate Smart Card networks

Touchless esp. after Covid-19

Receipt Photo based Payments

Chase Pay says that consumers will be usually able to use their smartphone to take a picture of their receipt to pay without having a terminal PIN pad making it another form of touchless payments.

Mobile Wallets Market Analysis

All Payments segments

  • Contactless payments still small percent of all Payments
  • By 2015 end, mobile wallets only accounted for around 4 percent of the overall payments market for in-store retail transactions, with Apple claiming 65% market share of that.

Market share

Rank Payment Use% CAGR%
1 Paypal 61%
2 Visa Checkout 20%
3 Amazon 16%
4 Apple Pay 12%
5 Android Pay 11%
9 Chase Pay 6%
* Data from Bernstein Research, 2017

Long Game needed to get universal access

PayPal is the longest player in the digital payments game and in 2017 was accepted at 377 of nearly 500 top online merchants. The ninth common Chase Pay was accepted at only four.

Key Factors for Developing World, China and India

Key Risk Factors


Apple Pay

Apple Pay - Services Push

As iPhone sales stagnate, Apple is turning to fee-generating services like its 30% take on appstore, its apps that stream music, curate news stories (paid/subscription cut), Apple TV even teaming up with Hollywood studios to produce original TV shows. The company aims to boost its services revenue to $50 billion by 2020.

Apple Pay has been adopted by 43% iPhone Users - Loup Ventures’ in Feb 2019.

Still, Apple Pay is a tiny piece of this goal just a few percent even as late as 2020.

Add multiple Credit Cards into Apple Pay

Apple Pay lets you add multiple Credit Cards into - in fact banks like Citicorp and Bank of America's credit cards account for the bulk of the transactions running over Apple Pay. Supposedly, Apple’s contracts with banks prevent it from making any credit card the default. Though for touchless, user can choose to use "last one used".

Goldman discussed making their new card the default in the iPhone’s digital wallet. Just by putting its muscle behind a Goldman-issued card, Apple risks angering In this manner Apple

Apple Pay success as it can leverage 1B+ IOS users

Apple Card

Apple would get a bigger slice of the swipe fees from its own card, some of the people.

A simple private label deal with Goldman Sachs

Apple and Goldman Sachs are the most high-profile example of that teamwork with the launch of the Apple Card. Google and Citi are also partnering to launch a Google-branded debit account.

Apple Wallet

Android Payments

Google Wallet 1.0 Failed - Key Factors

  1. One reason is lack of NFC chips due to lack of control over Android phones.

  2. High Fees. Google Wallet is great for sending money to and from anywhere for virtually any reason. Like Paypal, it charges 2.9% for debit cards, so linking to a bank account instead makes sense.

  3. One positive was that it leverages gMail with its ability to attach payments to Gmail messages.

  4. E-commerce Google Wallet synced up nicely with Google Checkout before that service went away in 2013.


2011 Google Wallet launched far ahead of Apple Pay, but failed to exploit its first-mover advantage. Originally Google required that banks become formal partners to be allowed to access a phone's secure element to make NFC payments. Only Citigroup was willing to jump through this hoop.

2012 Google Wallet added the lightweight credit card - just add at consumer end. Banks could simply fill out a form and upload card art; the trade-off is that Google would be the merchant of record for all Google Wallet transactions. This change brought more banks on board

2015 There are no setup or cancellation fees for Google Wallet, and it is available for Android and iPhones. The Wallet won a major victory when the competing Softcard app was retired in March 2015, which opened up access to T-Mobile, Verizon and AT&T customers. The biggest advantage for Google Wallet is the merchant function that allows customer tracking and outreach. It makes a big difference for businesses to be able to put a "Buy with Google" tab on their websites.

Google eventually sidelined Google Wallet to bring out the new Google Pay (which it originally called Android Pay).

Google's Pay leverages Android - Google Wallet

It is NFC-based (tap-and-pay) solution - however this GREATLY limits the percentage of Android phones as NFC chips have been in very few percent of phones historically.

Samsung Pay

Bank Sponsored Wallets - Far Behind

JPMorgan severe fails in Fintech

YouVest - lame, little takeup by existing account holders

Finn - Online Banking App shutdown

J.P. Morgan’s attempt at digital banking and payments has not been smooth. The bank in June 2019shut down its mobile banking app Finn, meant to lure millennials with zero fees and emojis, just a year after its nationwide release.

Online SME Loan biz ended

It also ended an online small business loan partnership with On Deck this year.

Chase Pay Strategy and Advantages

  1. Chase Pay was supposed to work on all smartphones - both iOS and Android.

  2. Consumers will be able to pay at places where other mobile payments don’t always work – like gas stations and drive-through windows

  3. Backed by its Strong Business/Retailer networks.

    1. The retailer-backed mobile payments consortium MCX beginning in mid-2016 to merchants who represent over 100,000 retail locations across the U.S. MCX includes Walmart, Target, Best Buy and Shell, and most stores in the big-box, convenience, pharmacy, fuel, grocery, quick- and full-service dining, specialty-retail and travel categories.
  4. Chase Pay was supposed to Support Retailer Loyalty Program - so customers won’t need to tote around their plastic loyalty cards or key fobs in order to earn points, use coupons, or receive discounts. This is NOT integrated in Apple Pay!

  5. Chase says that consumers will be usually able to use their smartphone to take a picture of their receipt to pay without having a terminal PIN pad making it another form of touchless payments.

Implementation - Closed Loop Visa Network - no 3rd Party Processing

Chase Pay uses QR codes. That means shoppers have to show the QR code to the cashier, who then scans it. This allows it to be used by nearly all smartphones. But unlike Apple Pay and Android Pay, which are NFC-based (tap-and-pay) solutions.

The Chase Pay app is a single use case for the ChaseNet system. Essentially it served more to demonstrate ChaseNet's capabilities than to secure the platform's success.

The Chase Pay app is an embodiment of ChaseNet, a closed-loop system that cut fees by eliminating third parties from processing when both the consumer and the merchant are Chase customers. ChaseNet is a customized processing and end-to-end payments platform built as part of a 10-year agreement with Visa that began in 2013.

Closing Chase Pay is explained as it has many other "traditional" credit cards - it is the link with ChaseNet that seems to be failing due to lack of adoption by merchants.


However, even as early as 2015 Chase Pay was in trouble.

To launch, 2016, Chase Pay customers the ability to make in-store, in-app and online purchases. This builds on its strength as - largest US bank by assets - Chase brings to the table a large number of potential users, noting that one of every two U.S. households is a Chase customers. - It has 94 million credit, debit and pre-paid card customers - a huge startup advantage - Chase is the number one in total U.S. credit and debit payment volume, whith $707 billion in sales last year.

2017 JPMorgan had partnered with payments processor PayPal Holdings Inc in 2017, which allowed users to link their Chase Pay and PayPal accounts and use reward points to make purchases.

2019 Early, The Chase Pay platform is still alive and well, but its standalone mobile app is being retired in favor of a strategy of embedding Chase Pay in the apps of providers such as GrubHub and LevelUp (of which Chase is an investor).

By 2019 end Chase said it would discontinue the smartphone app used to make payments at brick-and-mortar stores. Customers, it turned out, still preferred to use physical cards when paying in person. Fewer than 1% of online merchants accepted JPMorgan’s digital wallet as of mid-2019 as compared to 70% for Paypal. JPMorgan said customers would still be able to use Chase Pay on the websites and apps of retailers that accepted it.

To fully close Q1'2021 - as it failed to get traction in its Merchants Base Closing Chase Pay is explained as it has many other "traditional" credit cards - it is the link with ChaseNet that seems to be failing due to lack of adoption by merchants.

Wells Fargo - MIA

Bank of America - MIA

Citigroup - strong in Credit Cards - MIA

Goldman Sachs Wallet - Backing Apple Pay - does it have its own?

Goldman Sachs has one credit card offer: the Apple Card. Before the Apple Card launched in August 2019, there were no Goldman Sachs credit cards on the market. In fact, the Apple Card is the first-ever credit card issued by Goldman, which was founded in 1869. The company is known far more for investment banking and wealth management than traditional personal finance. Goldman launched an online consumer bank, Marcus, in 2016 to target retail customers with an online bank and to offset a decline in securities trading.

Instant penetration - User Still needs to APPLY!

The credit card is Goldman’s first credit card ever, and a heavy load to carry and manage to Apple's lofty standards. But it benefits from the far lower fraud and credit risks of Apple customers.

  1. Merchants already have terminals
  2. Processing Network. To save time and risks, Apple Pay card will use Mastercard Inc.’s payment network, which is the second-largest in the U.S. after Visa.
  3. Goldman’s is building an internal system to handle payments, statements - as part of Marcus bank anyway.
  4. Goldman’s is adding customer-support call centers around the country
  5. Goldman will approve card application, issuance, manage fraud, etc. Eventually there may not even be a physical card. Since Apple has a loyal following among wealthy, tech-savvy users the risks are likely small.

The ROI on a $250m+ investment is likely to be small. - Cardholders will earn cash back of about 2% on most purchases and potentially more on Apple gadgets and services, some of the people said. - It has to give a higher cut of credit card merchant fees to Apple. - Banks including JPMorgan Chase & Co. have spent heavily to lure cardholders with travel points, airport lounge access and other generous perks.

Cross selling Investing, Wealth management

With this partnership Goldman highest ROI hope might be to turn Apple affluent users into Marcus customers = adding rich Apple customers.

Marcus is leveraging the online bank finTech move - without bricks-and-mortar branches, the bank spends heavily on direct mail and paid referrals to bring in customers.

Goldman eventually could offer Marcus loans, wealth-management services and other products to Apple customers. While Goldman would have jumped on creating a more ambitious financial offering that would provide financial management FAR beyond the credit card.

However, since majority of credit card transactions are from EXISTING CREDIT CARDS WITH OLDER LARGER BANKS, this is not happening right away.

Also, Apple executives worried that tapping into people’s bank accounts would raise privacy concerns. So right now they are keeping at arks length, instead emphasizing the cool titanium looking card.

Store and Ecommerce Company "Private Label"

CurrentC - MCX 2015

Retailers saw Apple's mobile wallet as a way to grab valuable customer data and to lock consumers into paying by card instead of cheaper alternatives like ACH. So big box retailers like Walmart, Target, Best Buy and many other prominent retailers banded together to create the Merchant Customer Exchange (MCX), a mobile wallet meant to be used across all their brands. Many of these retailers refused to install the NFC readers necessary to accept Apple Pay, and some even shut off their existing NFC readers in solidarity with MCX.

2015-mid-2016 PILOT TESTING. But as MCX tested its wallet app, called CurrentC, Apple Pay steadily won over its stakeholders. A major turning point was Best Buy's decision to announce its support of Apple Pay during one of Apple's earnings calls. By end 2016 the wallet app was shut down, and MCX sold off some of its assets to JPMorgan Chase as part of Chase Pay.

Starbucks - Massive Win - Faster and Loyalty

Amazon Pay


Walmart struggles to enter Private Banking

Walmart Private-Label Credit Card

Walmart Pay


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