Digital Transactions Authoritative, insightful and timely information for payments professionals
By Jim Daly
The big merchant acquirer Chase Paymentech Solutions LLC on Tuesday announced a mobile-payments service that includes a reader that plugs into smart phones as part of a broader new service for small businesses called Chase Checkout.
After testing the service in five states, Dallas-based Chase Paymentech quietly began rolling out Chase Checkout in April, primarily through the 5,600 bank branches of its parent company, JPMorgan Chase and Co. In addition to mobile transaction processing, Chase Checkout also offers point-of-sale and online payment processing.
“It’s a new positioning for us,” Peter Gasparro, group executive of business development at Chase Paymentech, tells Digital Transactions News. “We are now branding the service. We hope it simplifies the message.”
While seemingly late to the smart-phone-based payments party, which began more than three years ago, Chase Paymentech has offered mobile solutions through third parties in the past, according to Gasparro. But the mobile component of Chase Checkout represents the acquirer’s first proprietary mobile service. “We’ve offered mobile solutions all along,” says Gasparro. “Our desire is that it’s solid and positioned right.”
And, according to Gasparro, Chase Paymentech is not about to go head-to-head with one of its own clients, the high-profile mobile processor Square Inc., which submits transactions from its merchants into the card networks through Chase Paymentech. For example, while Square stands in as the merchant of record for many of its clients, particularly micro-businesses and part-time sellers, Chase Paymentech requires that each Chase Checkout user have its own merchant account.
Gasparro says the primary target users are the 2.5 million small-business customers of Chase’s branches. And merchants are expected to generate a minimum of $25 a month in fees for Chase Paymentech, which will preclude many of the tiny merchants catered to by other mobile processors. “That sort of drives a certain level of [charge] volume behind it,” says Gasparro.
Chase Checkout’s base per-transaction price is 1.99% of the sale plus 25 cents. Merchants also pay a monthly fixed charge of $9.95 for just one of the three processing channels—point of sale, online, or mobile—or a combination rate of $16.95 for POS and mobile. While the latter price offers the best value, a surprising number of Chase Checkout merchants so far are going for just mobile processing. “Mobile quite honestly has come on pretty strongly,” says Gasparro. He declines to reveal user numbers, but says many client merchants are the type you’d expect for mobile payments—plumbers and other trades or service people who need to be out of the office or store.
The total package includes the Future Proof POS terminal made by Ingenico S.A. that Chase Paymentech introduced last year. Chase Paymentech won’t disclose how many Future Proof devices are now deployed, but Gasparro says, “it’s our lead terminal.”
Chase Paymentech is not charging Chase Checkout merchants for the hardware. The acquirer uses a third-party manufacturer that it won’t identify to produce the mobile card swipes, which encrypt data and plug into the audio ports of Android and Apple smart phones. The swipes also have their own rechargeable lithium batteries, which increase the likelihood of a successful swipe, and they don’t draw power from the phone.
Despite the hype mobile payments get in the media, Chase Paymentech is playing up the total Chase Checkout package in its sales pitches, marketing materials at branches, and digital advertising. “It [mobile] is the new kid on the block, it always seems to attract the most attention,” says Gasparro. “We don’t mind, but we try to talk about the whole solution set.”
