JPMorgan Chase is tapping fintech startup Marqeta's tokenization technology to issue virtual credit cards for the bank’s commercial clients, the two companies announced Tuesday.
The companies said the new functionality, which will be available early next year, will integrate with JPMorgan's existing systems and enable instant issuance of virtual cards into mobile wallets for the bank's commercial card clients. Marqeta's tokenization technology is used by companies such as Instacart and DoorDash, whose gig workers use the cards to pay for groceries or takeout orders.
- "Marqeta's push to wallet functionality will add a new dimension to virtual card payments," John Skinner, head of commercial cards at JPMorgan Chase, said in a statement. "With Marqeta, our virtual cards can be expanded to new use cases like facilitating payments to disaster relief volunteers or for recruitment spend where interview candidates can be issued a card into their mobile wallets for travel expenses."
"This opens up huge new possibilities for companies looking to streamline payments and provide innovative services to their people," Omri Dahan, chief revenue officer at Marqeta, said in a statement. "To bring this product to a company of J.P. Morgan's scale and have it utilized in a new way is tremendously validating of its market potential."
The partnership will expedite the process of getting company cards into the hands of those who need them, Skinner told CNBC.
"We know there’s a need for this product — what COVID has taught us is that there’s more use cases for this than we imagined," he said.
In general, virtual cards and contactless payments have seen a spike in use during the coronavirus pandemic.
About 31 million Americans tapped a Visa contactless card or digital wallet in March, up from 25 million in November, the payment network reported at the end of April. Overall use of contactless payments in the U.S. has grown 150% since March 2019, Visa added.
Mastercard reported contactless transactions were up 40% worldwide in the first quarter of 2020.
On a call with analysts in April, Mastercard CEO Ajay Banga attributed the trend to consumers "looking for a quick way to get in and out of stores without exchanging cash, touching terminals, or anything else."
Greg Mahnken, a credit industry analyst at Credit Card Insider, predicts 65% of cards on the market will be contactless by the end of the year, according to Business Insider.
"Going contactless in this environment, if there's ever been a time to do so, that's now," Upgrade co-founder and CEO, Renaud Laplanche told Banking Dive in April, following the launch of the challenger bank’s new contactless card.
Laplanche said the pandemic led the fintech to roll out the card months ahead of schedule.