Chase's MCX tech buy will take time to pay off — time that it may never get

MCX had to be a bargain for Chase, but a bargain is a bargain only if the value is greater than the cost, no matter how low that cost

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Credit: JP Morgan Chase

When JPMorgan Chase on March 10 acquired MCX’s payment technology to help with Chase Pay, it likely received a bargain. After all, it’s hard to envision an entity in a weaker negotiating position these days than MCX, which has already surrendered on delivering its own payment system. But a bargain is a bargain only if the value is greater than the cost, no matter how low that cost.

The MCX technology is based on QR codes, and even Walmart’s Walmart Pay is struggling with the same issues that have routinely plagued not-so-easy-to-scan-the-first-time QR codes.

But it’s not the technology that attracted Chase. It’s the customers that are already prepared to accept it as payment. The only thing that MCX did well was to corral some of the nation’s largest retailers into becoming members. Walmart led off, followed by Target, 7-Eleven, Kohl’s, ShopRite, Publix, Wendy’s, Wawa, CVS, Meijer, Michael’s, Dunkin’ Donuts, Lowe’s, Sunoco, Best Buy, Mobil and quite a few more.

Granted, just because most of those chains were ready to accept MCX doesn’t mean they still are. But it’s a start, and the one thing that Chase Pay needs more than anything else right now is merchants accepting it.

Apple was smart to launch Apple Pay only after it had a decent number of major brands willing to accept it for payments. Shoppers with the latest iPhones wanted to at least try this new NFC payment method. If they hadn't been able to find any local merchants that accepted it, the momentum would have been halted before it began.

With Chase Pay, which launched about four months ago, many Chase shoppers across the country struggle to find any physical store where it is accepted. Its “available now” merchant list is short. It claims Best Buy and Starbucks, but it appears to be only at select stores, and calls to stores in several states couldn’t find one where it was accepted. To be precise, I couldn’t find one where a store associate — the people at the POS — thought they could accept Chase Pay. And without associate training and awareness, few customers will be able to successfully use it.

Chase Pay also theoretically will be accepted at LevelUp merchants, but only in three cities: Dallas, Denver and Boston. Chase spokesperson Maribel Ferrer added in an email that "other places we have announced and are in different stages are Atom Tickets, Parkmobile, HMS Host, Shell, Phillips 66, Walmart, ShopRite and The Fresh Grocer stores — supermarkets that are part of the Wakefern cooperative." In other words, none of those places accept Chase Pay yet.

Chase Pay also says that it is accepted on various online sites. But the value-add in online is very different. The advantage for the customer is mostly found using the payment method in-store. Online payments today are fairly effortless, especially after the initial setup.

And therein lies the problem. Shoppers who saw the MCX technology announcement and thought it meant that they could suddenly use Chase Pay in that rich list of retail chains that were once active with MCX will find themselves disappointed.

Oddly, Chase Pay doesn't even embrace all Chase cards. Limiting itself to every card issued from just Chase would be restrictive, but doable. Given that only some Chase payment cards are payment options for Chase Pay further limits its viability.

Don't forget that shoppers want something as close to "one payment method for all merchants" as possible. Having to use Walmart Pay in Walmart and Target Pay in Target is bad enough, but using Chase Pay only for some of its payment cards is frustrating.

To be fair, none of these payment options is effective today. Apple Pay accepts far more cards and is accepted at a decent sliver of merchants, but can only be used with one brand of phone — iPhones, and only iPhones new enough to support NFC. Walmart Pay will work on a far larger number of phones from any handset maker, merely requiring the ability to host apps and have a decent camera to shoot the QR code. But it's restricted to just one merchant.

In theory, Chase Pay could deliver the best of both worlds, offering itself for almost all phones and all merchants who accept Chase payment cards. But I'd argue that it launched far too soon, long before it could deliver either — including even supporting all of its own payment cards.

The ability to be accepted at that wonderful list of MCX member retailers is intriguing, but only on paper. Chase Pay may have the best potential today, but it also has the worst immediate reality. Given that it was announced last year, that's remarkably far from good.

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