A Conversation with Jennifer Roberts, President of Strategic Alliances & Loyalty Solutions for Chase

Jennifer-Roberts-with-Chase-PayWe recently interviewed Jennifer Roberts, President of Strategic Alliances & Loyalty Solutions for Chase. In this Q&A format we discuss Chase’s growth in merchant and consumer markets, as well as evolution in mobile payments.

Jennifer Roberts is President of Strategic Alliances & Loyalty Solutions for Chase, which includes oversight over the recently announced Chase Pay and Chase’s Ultimate Rewards loyalty platform. She has been with the firm for more than 15 years, most recently serving as President of Chase Card Services’ Affluent/High Net Worth business. She has also held key roles in acquisitions, marketing, partner program management and more.

1. To level set, can you provide a brief overview of Chase’s payments assets with some context on the evolution of the business to date?

Over the past decade JPMorgan Chase has invested to build an end-to-end payments business. We created the nation’s leading consumer bank franchise through our acquisitions of Bank One and Washington Mutual. We brought control of our merchant acquiring business in-house in 2008. We acquired innovative Fintech assets such as the local offers provider Bloomspot and built unique capabilities in-house. And we have created a unique private network under a 2013 agreement with Visa, which I’ll describe in a moment. As a result, we can now handle a transaction all the way from when a consumer decides to pay to when a merchant receives the funds.

We are also a market leader in each link in the value chain. We have unparalleled assets in our issuing scale – including rewards products that have continually gained market share with consumers. We have the largest wholly-owned merchant acquirer through Chase Commerce Solutions. And we now have a closed-loop network of unique scale in ChaseNet. As a result, Chase is well-positioned to innovate and offer better solutions for merchants and customers.

2. What is ChaseNet? How would you characterize your progress with it in terms of merchant receptivity?

ChaseNet, which was created through a 10-year agreement with Visa, is a unique payment platform that allows merchants to process their Chase Visa credit and debit transactions directly with Chase – generating operational and economic value for merchants. By removing intermediaries that exist in a typical five party payment system, Chase can lower costs and pass those savings along to merchants. ChaseNet merchants also benefit from streamlined rules (e.g., removed signature requirement for transactions less than $1K), a simplified pricing structure, and access to value-added services such as Chase Offers and data insights.

We are very pleased with the adoption of ChaseNet. Since pilot testing in the first half of 2014, we have seen a significant volume of transactions and have won over merchants who had long-standing relationships with their payment processors. We disclosed in our 2015 Investor Day materials that by January 2015 we had over 60,000 merchants active on ChaseNet processing an annualized run-rate of $16 billion.


3. How does Chase Pay fit with and enhance Chase’s payments strategy?

Our consumer payments strategy has to solve problems and create real value for both merchants and consumers. On the consumer side, we believe the use of mobile wallets provides the opportunity to create new and differentiated consumer experiences. Our strategy is to lead the market with our own proprietary digital wallet, Chase Pay, and to be first-in-wallet with leading third-party wallet providers.

Chase Pay is really the consumer face to our payments strategy. It is the primary channel through which we can simplify the payment experience, add security, and deliver additional value to consumers. In developing Chase Pay, we thought about how to make it easy for Chase consumers, over 50 million of them, to shop online or on their mobile device or pay in store more simply. What we found through testing was that the ability to use your Chase log-in credentials, and not to have to go through a whole new registration process, made a big difference. People liked the seamless way to purchase and merchants also liked the fact that the consumer never left the merchant’s site. Chase Pay’s digital form factor also allows us to increase security through tokenization and open up a real-time, always-with-you channel for targeted and contextual offers and rewards.

I also mentioned we will be first-in-wallet with leading third-party wallet providers. The wallet market is very fragmented today, so we believe we need to be everywhere. Consumers are the ones that will make the decision on how they want to use their cards. We don’t want a Chase customer not to be able to use their card in their preferred wallet, so we’re supporting all of the different wallets that are out there in parallel with building out our own capabilities.

4. What do you view as the key differentiators of Chase Pay for merchants and consumers relative to the other mobile wallets? How does Chase view the adoption curve for mobile payments? What shapes your view of the short and long-term expectations given what we have learned so far given the size of Chase and its early adoption of Apple Pay?

As an industry we have been talking about mobile payments as “the future” for years – but adoption has been underwhelming to date. There are huge challenges to building new payment products for both consumers and merchants.

Consumer adoption of mobile payments is low. While about 40% of Chase households are active mobile customers – the largest mobile customer base of any major U.S. bank – mobile payments at the point of sale likely account for less than one percent of card volume. The act of swiping or dipping a card is a very simple and good experience. For a customer to switch to a mobile payment, it must meaningfully improve the card swipe experience.

Merchant adoption of mobile payments has also been spotty. Without driving real value – such as higher sales, more security, and lower cost – adoption will remain low. In observing what has worked well in terms of mobile payment adoption, it’s clear that the most successful programs build loyalty into the payment experience.

We think conditions are better than ever for well-designed mobile payment services to gain traction. More people than ever – over 75% of Americans – now have smartphones. Consumers are increasingly open to intuitive mobile payment services provided by institutions they trust. And merchants are interested in better payment solutions for mobile and omnichannel commerce.

Our launch of Chase Pay is unique in that we’re starting with large scale merchants. By solving merchant problems first – cost of payments, merchant fraud liability, and speed of checkout – we are creating an incentive for merchants to encourage their customers to use Chase Pay.

5. The partnership with MCX has the potential to benefit both parties – at a tactical level, how will Chase Pay as a stand-alone app and Chase Pay within the CurrentC wallet co-exist in a manner that avoids confusion?

We are very excited to come out of the gate with MCX as our premier partner. MCX merchants are the biggest players in every merchant vertical in the country. MCX merchants collectively have over 100,000 store locations across America. They also generate over $1 trillion of sales – one-fourth of all retail sales volume in the U.S. Chase customers will be able to use Chase Pay wherever CurrentC is accepted starting in mid-2016.

There are some clear similarities between Chase Pay and CurrentC. For example, like CurrentC, Chase Pay uses QR codes to initiate payment at the physical point of sale. We see QR codes as an easy-to-implement technology that merchants already use to scan gift cards. It is also a flexible technology that is not tied to the point of sale. In certain locations, like restaurants, consumers will be able to use their smartphone to take a picture of a receipt and pay with Chase Pay. Consumers will become increasingly familiar with the QR code experience when multiple major wallets use it. CurrentC and Chase Pay also support some similar in-app experiences, such as paying over the air with your smartphone at places like gas stations or fast food drive-through windows.

MCX merchants can enable Chase Pay either directly or through the CurrentC app. Different merchants may choose to enable different experiences. Consumers will come to learn what payment experiences a given brand supports. We plan to work closely with MCX and its merchants over the next six months to create intuitive user experiences. We will ensure Chase Pay is easy for merchants to implement and easy for consumers to use.

6. As you look forward, how could Chase Pay evolve, particularly in areas such as supporting private label cards, other third-party credit cards, or alternative payments in the wallet?

Chase Pay will absolutely continue to evolve. It is early days for mobile wallets and we are still very much in learning mode, as every institution should be. We will listen closely to our customers – both merchants and consumers – and make enhancements that make sense.

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