PayPal and JPMorgan Chase have announced a partnership deal aimed at increasing the adoption of online payments. The deal will assist in widening the reach of the Chase Pay service, an app on mobile devices unveiled to increase the usage of the lender’s debit and credit cards both when making purchases online and in offline outlets.
It will also enable users to load their PayPal accounts using cards from JPMorgan as well as use the reward points they earned to purchase services and goods via PayPal.
“These are parallel strategies. We want to be where our customers are,” said a JPMorgan executive for Chase Pay, Jennifer Roberts.
The rapidly growing mobile payments sector has attracted various players from various sectors including retailers such as Walmart, credit card platforms such as Visa and tech companies such as Apple, leading them to build their proprietary digital wallets with a view to capitalizing on the opportunity. According to Javelin Strategy & Research, the volume of mobile payments is expected to hit $319 billion by 2020. Two years ago the value of mobile payment transactions was $122 billion.
Having been in existence for close to two decades, PayPal has an advantage over others in ecommerce. Currently, the number of active customers that PayPal has in the United States is 94 million. Morgan Stanley analysts last year revealed that approximately 73% of the large online retailers accepted PayPal.
Brick and mortar retailers
Since last year, PayPal has been extending its reach by seeking acceptance from more brick and mortar retailers. The agreement with JPMorgan will help cardholders pay via the platform of the San Jose, California-based firm in physical retail stores. In the recent past PayPal has signed deals with other financial firms such as Wells Fargo, Discover Financial Services and Citigroup giving cardholders with cards issued by the above ability to make payments at brick and mortar retail outlets via PayPal.
In the case of Chase Pay, the benefit is that it will extend acceptance at online stores. Already it is widely accepted by big retailers such as Best Buy and coffee chain Starbucks but that is not replicated in the online arena.
The deal between the two firms will also see Chase Pay accepted as a method of payment by merchants whose transactions are processed via Braintree, a subsidiary of PayPal which boasts of tech firms such as Airbnb and Uber Technologies as clients.