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What’s in Your Mobile Wallet? Capital One Launches M-Payments Solution (Oct. 14, 2015)

capitalone_mwalletWith today’s launch of its Capital One Wallet, Capital One is the first U.S. bank to enter the mobile wallet race. But with 22 million active mobile customers, Chase may not be far behind.

The Capital One Wallet, which uses the MasterCard Digital Enablement Service (MDES) and Visa Token Service (VTS) platforms, enables customers to use their Capital One credit and debit cards directly from their phones to make contactless payments at the POS where contactless payments are accepted.

Customers can use the new wallet app, which is available at the Google Play store, if they have an Android phone using an operating system v4.4 (Kit Kat) or higher and with NFC, which enables the handset to transmit a secure payment token, according to an announcement. In addition to making m-payments, the Capital One Wallet app helps customers manage their spending with features including real-time notifications for all transactions, instant rewards redemption options, and access to balance and transaction history.

Capital One is entering a space in which Apple Pay has almost a year head-start on rivals, including Google’s Android Pay and Samsung Pay, both of which recently launched in the U.S. And, the Capital One Wallet only works with Capital One cards.

Chase’s mobile wallet may be soon to join the party. When Chase announced initial Apple Pay statistics in February—more than 1 million cards activated in the mobile wallet—the bank said it also was exploring its own mobile wallet. And in its third-quarter earnings report yesterday, Chase said it has more than 22 million active mobile customers, up 21 percent from the same period last year. Payments at the POS may be an extension of Chase Pay, a service that supports digital payments to e-merchants without requiring customers to enter account, billing and shipping details. CFO Marianne Lake told investors during a conference call yesterday that Chase Pay will be launched more broadly this year, according to a Seeking Alpha transcript. “We’re focused on mobile and digital primarily because it’s going to be great for the customer experience,” she said, noting the opportunities to meet consumer demand while reducing costs and improving efficiency. “We’ve been very focused on [digital/mobile] … and we’ve been seeing great results.”

Tim Sloane, vice president, payments innovation at Mercator Advisory Group, suggests that it’s taking longer for banks to develop mobile wallets that rely on host card emulation. “The delay for banks has been caused primarily by the networks lack of resources outside of Apple Pay, Android Pay and Samsung Pay (and rumored LG’s GPay),” Sloane tells Paybefore. One of the challenges HCE presents is related to provisioning services and fraud management, Sloane contends. “Mobile payments are more at risk in an HCE solution provisioned into a non-secure mobile device, which in Europe has been managed by limiting these HCE implementations to between 30 and 100 euros, depending on the bank’s appetite for risk.”

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