Maybe not Stripe, and maybe not Block – not specifically, anyway.
Instead, JP Morgan’s latest acquisition looks like a shot through PayPal’s arc.
It’s no secret that banks want — and need — to expand their payment capabilities, serving a variety of new use cases that serve both consumers and business customers.
To this end, JP Morgan said on Monday (September 12) that it is buying Renovite Technologies, a cloud-based payment technology company.
Treasury Services and Beyond
Mechanically, the financial services giant is integrating Renovite into its JP Morgan Payments operations, which in turn are geared towards corporate treasury services, trade finance, card services and merchant services capabilities. .
According to Monday’s press release, seven-year-old Renovite has created six proprietary, cloud-agnostic, and payment token-agnostic payment products to help their customers “optimize infrastructure, including switching, reconciliation , security, issuance, ATMs and testing. Renovite also has a presence in India and the UK and has been providing services to JP Morgan since 2021.”
The focus here, of course, would most immediately be on merchant services, on a large global stage. And while the media seems (at least for now) to be focused on the challenge the bank’s actions would pose to Stripe and Block, we argue that the competitive sparring is aimed instead at PayPal.
PayPal, of course, operates as a two-sided network, where customers and payment processing and a wide range of next-generation connected economy use cases merge.
(We’re seeing more evidence of this cross-pollination from other big names in financial services. American Express, for example, has launched a buy now, pay later (BNPL) option with Delta.)
For JP Morgan Payments/Renovite, by connecting consumers and merchants, with the flexibility that tokenization fosters, can enable JP Morgan to in turn transition to connected cars and other environments where commerce is deeply integrated into the mix. And these use cases can be streamlined with a range of payment methods.
The aforementioned feature, aimed at optimizing card infrastructure and capabilities, suggests that beyond putting JP Morgan in direct competition with the PayPals of the world, the eventual challenge as JP Morgan ( and by extension its payment transactions) may concern the card networks themselves. .
JP Morgan is the largest bank in the United States and one of the largest banks in the world. It has the scale to connect customers to merchant bank accounts directly and in real time. JP Morgan, among others, also has the ability to get ever more creative with offers and rewards for customers (both personal and corporate), backed by its huge deposit base. In this case, the company could diversify further into BNPL/installment loans, for example, which could help build customer loyalty.
On all channels, of course. As PYMNTS’ Karen Webster wrote earlier this year, “digital transformation…was never meant to mean just digital. It was always about the reality that eventually almost all interactions with the physical world will have some sort of digital connection.The great opportunity for innovators to create these new experiences for consumers and businesses and to engage and monetize these interactions will fuel the digital transformation of the global economy.
As Julie Lubell, global head of trends and intelligence consulting at JP Morgan, told Webster on the eve of 2022: five trends the company is watching right now as it seeks to more fully bring cash management professionals and corporate clients in the digital age: a culture; anything as a service; payments as a source of income; align working capital and liquidity; and addressing environmental, social and governance (ESG) initiatives. The one theme that permeates all of these trends is connectivity, we then notion. And the Renovite deal is just one more building block put in place to help that connectivity become a reality.
Read also: JPMorgan calls 2022 the year of connectivity and predicts the rise of ‘Anything as a Service’
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