JPMorgan Chase has moved to bolster its valuable wholesale payments business by building an e-wallet that lets e-commerce and gig economy firms such as Amazon and Airbnb offer their customers virtual bank accounts.
With technology giants increasingly moving in on banks’ turf, JPMorgan Chase has decided that its best option is to help them do it.
With technology giants increasingly moving in on banks’ turf, JPMorgan Chase has decided that its best option is to help them do it.
According to Bloomberg, the Wall Street giant has spent a year building an e-wallet that gives online marketplaces and gig economy players the ability to offer their millions of customers virtual bank accounts and related perks.
This will save the companies money on payment processing fees paid to, among others, JPMorgan.
However, in exchange, the tech firms will be require to let the bank handle all of their payment processing and cash movement.
With tech firms looking to move into financial services anyway, JPMorgan has calculated that it can cede some ground in exchange for securing the health of a wholesale payments business that contributed a tenth of the bank’s $109 billion in revenue last year, says Bloomberg.
The likes of PayPal and Ayden are already threatening banks’ payments revenues, while the fear of a US version of Alipay or WeChat haunts the industry.
JPMorgan is targeting the 10 biggest e-commerce and gig economy players. Takis Georgakopoulos, wholesale payments chief, tells Bloomberg: “We’re talking to all of them. We want the whole industry to use it.”
Last year, reports suggested that Amazon had begun talking to banks, including JPMorgan Chase, about developing a checking account-style product for its millions of customers.
At least one company could be live with the new offering by the end of the year, although JPMorgan could have trouble attracting all of its targets – last week, Uber chose to work with Green Dot on a wallet for its drivers.
