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A customer slides their card into a Chase ATM. (Heather Stone, Chicago Tribune)
By Becky YerakTribune staff reporter5:29 p.m. CDT, May 5, 2014
Chase replaces more MasterCards,discontinues Blink
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Chase is replacing more MasterCard credit cards with Visaand has discontinued Blink, a contactless paymenttechnology, “due to limited merchant acceptance and lowcustomer usage,” according to a letter sent to ChaseMasterCard customers.
Former Chase executive Charlie Scharf, once considered apotential successor to JPMorgan Chase CEO Jamie Dimon,became head of Visa in November 2012. Three monthslater, Chase announced a deal with payments network Visa in which the bank will launch apayments platform that will process transactions initiated with its own Visa cards atmerchants that enroll.
As part of the deal, Chase agreed to shift additional credit- and debit-card volume to
Visa.
“Chase is getting the benefit of volume discount pricing,” David Robertson, publisher of theNilson Report, which tracks the payments industry, said Monday. In trying to recreate Visa’spayments network, Chase believes it has found “a way to differentiate itself from other issuersof Visa and MasterCard by controlling how transactions are authorized and settled.”
For consumers, the key question is whether any benefits, including car rental insurance andextended warranty, will be inferior to what they used to be under MasterCard, said OdysseasPapadimitriou, a former Capital One senior director and current CEO of personal financewebsites WalletHub.com and CardHub.com.
“Depending on the impact and the importance of those benefits to you, you may want to opena MasterCard from another issuer, if you do not already have one,” he said.
As for Blink, which Chase still bills on its Web site as a “faster, easier way of making purchaseswithout ever letting go” of a card, Nilson Report’s Robertson said that there had been an
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without ever letting go” of a card, Nilson Report’s Robertson said that there had been anexpectation that “contactless” payments are "taking forever to play out in the market" despitebig expectations.
And many believe the future of contactless payments will be through smartphones, not onplastic cards, Robertson said.
The other side of the equation, Robertson said, are the merchants.
Contactless payments are appealing to quick service restaurants and convenience storesbecause the technology can significantly reduce checkout times, said Michael Misasi, senioranalyst for Mercator Advisory Group. But U.S. usage hasn’t been widespread, mostly due tothe cost to roll it out.
Misasi said only 10 percent of retailers currently offer contactless payments.
Banks are already working to equip their card portfolios with embedded chips, which arebelieved to be safer than those with magnetic strips but are also more expensive, addinganother deterrant to keeping up with expensive contact-less technology.
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Copyright © 2014 Chicago Tribune Company, LLC
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