JPMorgan Chase encouraging mobile wallet use
From Q1 next year, users of JPMorgan's Chase Freedom wallet will be able to earn rewards when using Apple Pay, Android Pay and Samsung Pay, in a move aimed at increasing adoption of its mobile wallet. The US mobile wallet market underperformed in 2017, and Chase Freedom struggled in particular, with just 6% of shoppers adopting it, despite a $100m investment. However, by taking a leaf out of Samsung's book, whose specific rewards programme led to a huge increase in engagement, JPMorgan hopes to encourage use of the wallet.
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Chase Freedom cardholders will be able to earn additional rewards by paying with Apple Pay, Android Pay, Chase Pay, and Samsung Pay in Q1 2018.

Each quarter, Chase announces rotating categories in which customers can earn up to 5% cashback — the card’s standard is 1% — on up to $1,500 in purchases. Customers can enroll in the benefit through mid-March, though it will apply retroactively to purchases made from January 1.

At its surface, the move is a somewhat confusing one for Chase, which is attempting to promote its own struggling mobile wallet. US mobile wallet adoption is paltry across products, stagnating around 25% at best. But Chase Pay, Chase’s proprietary, QR-code based wallet that launched last fall, is doing particularly poorly.

Despite a nearly $100 million investment in the wallet, just 6% of shoppers had used the platform in the past year, and the retailer’s network of merchants still remains limited, which is stifling adoption. It seems like it would make sense for Chase to promote Chase Pay at the forefront, which is why the inclusion of other services seems counterintuitive at first glance.

But any uptick in wallet usage would likely benefit Chase in the long run.

Specific incentives are the key to adoption and engagement. The force of habit is hard to break, and so it’s tough to get customers to give up card payments, which they’re both very accustomed to and satisfied with, without a strong incentive. Specific incentives, which layer rewards directly tied to paying via mobile on top of existing card or retailer programs, could be a game changer — Samsung’s specific rewards program, for example, has led to vast increases in adoption and engagement. Chase’s program, which encourages customers to continue to pay via mobile over the course of three months, could aid in habit formation and build up repeat usage.

The force of habit is hard to break, and so it’s tough to get customers to give up card payments, which they’re both very accustomed to and satisfied with, without a strong incentive. Specific incentives, which layer rewards directly tied to paying via mobile on top of existing card or retailer programs, could be a game changer — Samsung’s specific rewards program, for example, has led to vast increases in adoption and engagement. Chase’s program, which encourages customers to continue to pay via mobile over the course of three months, could aid in habit formation and build up repeat usage. And Chase could be the benefactor of those gains. If Chase’s plan works, and mobile wallet usage ticks up among Freedom cardholders, the mobile wallet habits that are formed will be around Chase’s Freedom card, ultimately increasing top-of-wallet status for the card and growing the percentage of spending that consumers do on Freedom versus competitors, according to NerdWallet. That ultimately grows loyalty, as well as volume and revenue.

Jaime Toplin, research analyst for BI Intelligence, Business Insider's premium research service, has written a detailed report on mobile payments that:

Sizes the US in-store mobile payments market and examines growth drivers.

Analyzes headwinds that have suppressed adoption.

Identifies three strategic changes providers can make to improve their results.

Evaluates pockets of success in the market.

Provides actionable insights that providers can implement to improve results.

Interested in getting the full report? Here are two ways to access it: