- JPMorgan Chase has spent the past year developing an e-wallet tailored to companies such as Airbnb, Lyft and Amazon, which would give customers virtual bank accounts and offer perks such as car loans or discounts on home rentals to those who keep money there, according to Bloomberg.
- Tech companies can only use the platform if they let JPMorgan assume all payment processing and cash movement for them. But presumably, the more customers use their virtual accounts to pay for services, the less the tech companies would have to give the bank in payment-processing fees.
- Competition in the payments space from nonbanks and tech companies is putting banks at risk of losing $280 billion, or about 15% of their revenue, over the next five years, Accenture reported in September.
Banks and gig economy behemoths are both facing the same threat — technology could push them out of their own transactions. Uber responded last week by announcing it’s rolling out its own e-wallet platform in partnership with Green Dot.
"A company's biggest fear is that once they establish a commerce-type relationship, they can't maintain the end user, and they leave the ecosystem because they now have a direct relationship with the seller," Matt Loos, a managing director in JPMorgan's global payment strategy and product group, told Bloomberg.
JPMorgan's strategy is to cede some control of its payments business, which accounted for 10% of the bank's $109 billion in revenue last year, and build more partnerships.
The bank is targeting the 10 biggest e-commerce and gig economy companies, including Amazon, Uber, Airbnb and eBay, said Takis Georgakopoulos, a managing director who runs wholesale payments for JPMorgan. "We're talking to all of them," he told Bloomberg. "We want the whole industry to use it."
JPMorgan says its e-wallets' virtual account technology can simplify an e-commerce company’s refund process, expedite payouts to sellers and boost loyalty. The bank plans to go live with the technology with at least one client before the end of the year, Georgakopoulos said.
JPMorgan is unique in the payments space, however, in that it is the only U.S. bank whose businesses reap fees from both accepting and processing payments, Bloomberg reported. JPMorgan's merchant-services operation collects a fee when a customer pays for a product on a platform, and the bank's treasury service unit generates revenue handling the payout to the supplier or seller.