Maybe not Stripe, and maybe not Block — not specifically, anyway.
Instead, JPMorgan’s latest acquisition looks like a shot across PayPal’s bow.
It’s no secret that the banks want — and need — to broaden their payments capabilities, serving a variety of new use cases that serve consumers and enterprise clients alike.
To that end, JPMorgan said Monday (Sept. 12) that it is buying Renovite Technologies, a cloud-based payments technology company.
Treasury Services and Beyond
In terms of mechanics, the financial services giant is folding Renovite into its JPMorgan Payments operations, which in turn are geared toward corporate treasury services, trade finance, card and merchant services capabilities.
Seven-year-old Renovite, according to the Monday news release, has built six proprietary, cloud-agnostic and payment token agnostic payments products to help their clients “to optimize infrastructure, including switch, reconciliation, security, issuing, ATM and testing. Renovite also has a presence in India and the United Kingdom and has supplied services to JPMorgan since 2021.”
The focus here, of course, would be most immediately on merchant services, on a grand and global stage. And though the media seems to be (at least for now) focusing on the challenge that the bank’s actions would pose to Stripe and Block, we contend that the competitive jousting instead takes more direct aim at PayPal.
PayPal, of course, operates as a two-sided network, where customers and payments processing and a wide range of next-generation connected economy use cases all gel together.
(We’re seeing more evidence of this cross-pollination from other marquee names in financial services. American Express, for example, has debuted a buy now, pay later (BNPL) option with Delta.)
For JPMorgan Payments/Renovite, by linking consumers and merchants, with the flexibility that tokenization fosters, can enable JPMorgan to in turn rise to the connected cars and other settings where commerce is deeply embedded into the mix. And those use cases can be streamlined with a range of payment methods.
The above-mentioned functionality, to optimize infrastructure, and card capabilities hints that beyond bringing JPMorgan directly into competition with the PayPals of the world, the eventual challenge as JPMorgan (and by extension its payments operations) may be to the card networks themselves.
JPMorgan is the largest bank in the U.S., and among the largest banks in the world, and has the scale to connect customers with merchant bank accounts — directly, in real time. JPMorgan, among others, also has the ability to become ever more creative with offerings and rewards to clients (individual consumers and enterprises), underpinned by its huge deposit base. In that case, the company could branch out more fully into BNPL/installment loans, for example, that could help cement customer loyalty.
Across channels, of course. As PYMNTS’ Karen Webster wrote earlier this year, “Digital transformation … was never intended to mean digital-only. It was always about the reality that, eventually, almost every physical-world interaction will have some kind of a digital connection. The great opportunity that innovators have to create those new experiences for consumers and businesses and to engage and monetize those interactions will power the digital transformation of the global economy.”
As Julie Lubell, global head of trends and intelligence advisory at JPMorgan, told Webster as 2022 dawned: five trends the company is watching right now as it seeks to bring treasury management professionals and client firms more fully into the digital age include: Digital as a culture; anything-as-a-service; payments as a revenue driver; aligning working capital and liquidity; and addressing environmental, social and governance (ESG) initiatives. The one theme that permeates all these trends is connectivity, we noted then. And the Renovite deal is only one more building block being set in place to help that connectivity become a reality.