By acquiring WePay, JPMorgan Chase — the bank that comes to mind when words like "incumbent" and "legacy" are uttered — proves that size does matter in the fintech game.
For just $200 million — pocket change to the likes of JPMorgan — the mega-bank gains an experienced tech-savvy merchant acquirer and digital payments enabler, enabling a fast upgrade to its existing business banking and merchant services lines of business.
WePay, which provides development tools that help small to medium sized businesses build e-commerce interfaces, could also give the bank's Chase Pay mobile payment system a much-needed boost.
Chase Pay debuted about a year ago, though it has its roots in the ChaseNet platform originally developed in partnership with Visa. The product provides a way to link Chase's consumer and merchant clients, offering a sleeker and cheaper way to process payments.
This appeal to merchants gives Chase one half of the chicken-and-egg equation it needed to build a digital payments system — at least in the brick-and-mortar world. WePay gives Chase the means to bring this strategy to e-commerce.
In the small business segment, JPMorgan Chase faces small-business payment technology companies like Square, which is pairing its mobile card acceptance technology with small business and potentially consumer lending; and Stripe, which like WePay offers an API to power easy e-commerce access for small businesses. Stripe has expanded rapidly, reaching a valuation that gives it an ability to quickly add new markets and products, or entice a well heeled acquirer.
"Cloud-based solutions for payment acceptance, such as WePay…have reduced the development time, the expertise required and the cost associated with launching a new internet service or marketplace," said Tim Sloane, vice president of payments innovation and the director of the Emerging Technology Advisory Service at Mercator. "[It] has even displaced clunky solutions that were built up over generations of upgrades that have become too complex and risky."
Chase Pay grew partly out of the ashes of the former Merchant Customer Exchange, and has done well in luring larger merchants. The bank had a deal to support MCX , a mobile payment system operated by Walmart, Target and other large retailers. But MCX's digital wallet, CurrentC, never made it out of pilot. JPMorgan Chase bought MCX's technology to make it easier to place the bank's mobile payment system in MCX's merchants.
Chase Pay's activity thus far has focused on individual deals that have boosted its profile in specific categories, such as restaurants and parking ramp operators, and movie ticket apps. It has also done well with large retailers, luring Starbucks, Best Buy, Phillips 66, Conoco, and Walmart. JPMorgan Chase additionally has an investment in mobile payment and marketing app LevelUp to support the bank's small business acquiring strategy.