News Column

Chase replaces more MasterCards, discontinues Blink

May 5, 2014

By Becky Yerak, Chicago Tribune



May 05--Chase is replacing more MasterCard credit cards with Visa and has discontinued Blink, a contactless payment technology, "due to limited merchant acceptance and low customer usage," according to a letter sent to Chase MasterCard customers.

Former Chase executive Charlie Scharf, once considered a potential successor to JPMorgan Chase CEO Jamie Dimon, became head of Visa in November 2012. Three months later, Chase announced a deal with payments network Visa in which the bank will launch a payments platform that will process transactions initiated with its own Visa cards at merchants 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 the Nilson Report, which tracks the payments industry, said Monday. In trying to recreate Visa's payments network, Chase believes it has found "a way to differentiate itself from other issuers of Visa and MasterCard by controlling how transactions are authorized and settled."

For consumers, the key question is whether any benefits, including car rental insurance and extended warranty, will be inferior to what they used to be under MasterCard, said Odysseas Papadimitriou, a former Capital One senior director and current CEO of personal finance websites WalletHub.com and CardHub.com.

"Depending on the impact and the importance of those benefits to you, you may want to open a 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 purchases without ever letting go" of a card, Nilson Report's Robertson said that there had been an expectation that "contactless" payments are "taking forever to play out in the market" despite big expectations.

And many believe the future of contactless payments will be through smartphones, not on plastic cards, Robertson said.

The other side of the equation, Robertson said, are the merchants.

Contactless payments are appealing to quick service restaurants and convenience stores because the technology can significantly reduce checkout times, said Michael Misasi, senior analyst for Mercator Advisory Group. But U.S. usage hasn't been widespread, mostly due to the 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 are believed to be safer than those with magnetic strips but are also more expensive, adding another deterrant to keeping up with expensive contact-less technology.

byerak@tribune.com

Follow @BeckyYerak Follow @chibreakingbiz

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Source: Chicago Tribune (IL)


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