ON JPMorgan Chase (NYSE:JPM) has agreed to acquire a payments startup called Renovite to fend off threats from fintech companies including Stripe and Block (NYSE:SQ), CNBC has learned.
JPMorgan Chase is also traded on B3 via ticker (BOV:JPMC34).
The bank, a major player in the global payments arena, said the acquisition of Fremont, Calif.-based Renovite will accelerate its ability to launch new merchant offerings.
Although JPMorgan is the world’s largest business services provider by transaction volume, fast-growing start-ups including Stripe and Block have climbed the rankings in recent years, thanks to growing e-commerce sales and the proliferation of new payment methods. Merchant acquirers are key behind-the-scenes service providers that enable sellers to accept in-person and online payments while keeping a small stake in each transaction.
The block is also traded on B3 via ticker (BOV:S2QU34).
Despite running a payments giant that processes more than $9 trillion a day across multiple businesses, JPMorgan’s merchant acquisition revenue stagnated last year in part because it lagged in some e-commerce segments and offered fewer services than others. Fintech rivals, head of global payments Takis Georgakopoulos told investors at a conference in May.
“Changing this image is the big story behind our investments,” promised Georgakopoulos.
The acquisition of Renovite, which was first reported by CNBC, is the latest in a series of fintech deals made under the leadership of CEO Jamie Dimon. Since the end of 2020, JPMorgan has acquired at least five startups, from an ESG investment platform to a UK-based roboadvisor, as well as a number of small fintech investments.
Dimon has repeatedly warned about the threat fintech poses to traditional banks, especially in the highly competitive payments game.
Fintech players have used merchant payment processing as a wedge to help them build ecosystems that have garnered rave reviews. They were also more agile in enabling new payment methods, such as Klarna and Affirm offers.
Dimon was forced to defend his bank’s rising costs this year as it poured billions of dollars into technology amid a 25% plunge in shares fueled by recession fears.
The deal with Renovite, under terms that could not be determined, shows the longtime CEO is undeterred by concerns that he is overspending on technology.
From judgments to acquisitions
JPMorgan tested Renovite as a vendor last fall, but was impressed enough with the startup’s products — particularly a cloud-based switch that routes payments to multiple providers — that it decided to buy the company, according to Mike Blandini. , to the bank’s payment manager. technology.
The plug-and-play nature of the exchange platform allows JPMorgan to add new payment options in a fraction of the time it used to take because it requires much less coding, he said in an interview.
“Our customers really appreciate choice; they want to offer many different payment methods to their customers, be it Visa, MasterCard, but also Buy Now, Pay Later, etc.
“Being able to enable these country-specific payment methods also helps us with our geographic expansion, as we don’t have to spend a lot of time creating local payment methods,” he added.
While JPMorgan is generally comfortable partnering with fintech companies and has relatively small stakes in them, the bank considers Renovite’s product too important not to buy, Neukirchen said.
The bank also wanted about 125 of the company’s engineers, based in India and the UK, to help JPMorgan with its product development plan, he added.
With information from CNBC