JPMorgan (JPM) Fintech Deal to Buy Renovite to Fight Stripe and Block

The main entrance at JPMorgan’s headquarters in New York City.

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JPMorgan Chase agreed to acquire a payments startup called Renovations to combat threats from fintech companies including Stripes and Unit CNBC found out.

The bank, a major player in the global payments space, said its acquisition of Fremont, California-based Renovite will accelerate its ability to roll out new services for merchants.

While JPMorgan is the world The biggest merchant-by-volume provider, fast-growing emerging companies including Stripe and Block have climb the leaderboard in recent years, thanks to the explosion of e-commerce activities and the rise of new payment methods. Seller-acquisitions are important behind-the-scenes providers that allow merchants to accept payments in person and pay online, keeping a small portion of each transaction.

Although operating a payment overwhelming power Processing more than $9 trillion a day across a number of businesses, JPMorgan’s merchants experienced stagnating revenue last year in part because it lags behind in some e-commerce segments and offers little services than some fintech competitors, global payments director Takis Georgakopoulos tell investors at a conference in May.

“Changing that picture is a big story behind our investments,” claimed Georgakopoulos.

Shopping frenzy

The Renovite acquisition, first reported by CNBC, is the latest transaction in the chain of fintech transactions made under CEO Jamie Dimon. Since the end of 2020, JPMorgan has acquired at least five startups, from an ESG investment platform to a UK-based robotics manager, in addition to making a range of fintech investments. less.

Dimon has many times raise alarm about the threat that fintech players pose to traditional banks, especially in the highly competitive payment game.

Fintech players already use merchant payment processing as a wedge to help them build the resulting ecosystem weep pricing. They are also often more agile in enabling new payment methods such as services from Klarna and Affirmation.

Dimon was forced to protect his bank increased costs this year as they invested billions of dollars in technology amid a 25% drop in stocks due to recession fears.

The Renovite deal, for undetermined terms, shows that the longtime executive is undeterred by concerned that he spends too much about technology.

From trial to takeover

JPMorgan ran tests with Renovite as a vendor last fall, but was impressed enough with the startup’s products – especially a payment routing cloud-based switch to different suppliers – so they decided to buy the company outright, according to Mike BlandinaThe bank’s global leader in payment technology.

The plug-and-play nature of the conversion platform allowed JPMorgan to add new payment options in a fraction of the time it used to because it required much less coding, he said in an interview.

“Our customers really value choice; they want to offer a variety of payment methods to their customers, whether it’s PassportMasterCard, but also Buy Now, Pay Later, etc”, said Max Neukirchenthe company’s global leader in payments and commerce solutions.

“This ability to enable country-specific payment methods also helps us expand our geography, as we don’t have to spend a lot of time building local payment methods,” he said. said more.

While JPMorgan is generally content to partner with fintechs and hold a relatively small stake in them, the bank feels that Renovite’s product is too important not to own, Neukirchen said.

The bank also wants about 125 of the company’s engineers, located in India and the UK, to help JPMorgan in its product roadmap, he added.

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