@JP Morgan Chase & Co and WePay


In the last few years, the financial sector has dramatically changed due to unstable and complex market conditions, new regulations and variations in consumers’ behaviours. More specifically, in the past decade, the rise and further development of new technological tools and digital innovations led to the emergence of high technology companies which begun delivering innovative financial products and services. These firms are called fintech companies and represent the fintech industry – where FinTech stands for Financial Technology – which describes an emerging financial services sector based on new technology and innovation aiming to compete with the traditional financial methods. They consist of both startups or well established financial and technological companies which try to replace the traditional financial tools using latest digital innovations. The fintech industry is growing rapidly and it is expected to grow even more in the next future. In particular, the increasing use of smartphones for mobile banking transactions and investing services are clear examples of how financial services are becoming more and more accessible to customers. Originally, Fintech referred only to the back-end of established consumer and trade financial institutions but in the last few years the term has expanded to include any technological innovations such as trading, insurance and mobile payment, as well as risk management or cryptocurrencies like bitcoin

Figure 1: Data from “Business Insider”, retrieved from Business Insider

As the image above illustrates, there are a multiplicity of different fintech companies which focus on particular financial sectors including payments, alternative finance, insurance, digital banks and blockchain. Fintech is therefore used in four broad categories:

  • B2B for banks
  • B2B for business clients
  • B2C for small businesses
  • B2C for consumers

In 2017, given the continuous evolution of Fintech, traditional financial services institutions have deepened their relationships with technology firms, implementing new business models and strategies to face challenging market conditions. Investing in these companies is no longer considered as a threat to be ignored, but as a valid opportunity to exploit relevant advantages in terms of competitiveness and better performance.


JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.5 trillion and operations worldwide. The firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. It serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients.

In October 2017, JP Morgan Chase & Co. announced that it would acquire WePay, its first major acquisition of a fintech company. Founded in 2008, WePay offers payments capabilities to business platform such as online marketplaces and cloud software providers. The startup is currently offering services such as credit card processing, fraud risk protection, regulatory compliance and customer support. WePay is used by crowdfunding websites, such as GoFundMe, but also by the online marketer Constant Contact. The firm use application programming interface (APIs) to integrate payments functionality with software.


The financial terms of the contract were not publicly disclosed but The Wall Street Journal reported that the price paid by JP Morgan Chase for the acquisition of WePay is higher than the valuation of $220 million achieved by the startup in the 2015 fundraising round.

Nowadays, given the predominance of fintech companies operating in the payment industry, the traditional payment companies are struggling to be highly competitive in their sector and suffer from market pressure. Think, for instance, about the software-enabled payments which are increasing four times more than the financial industry on average. What seems almost clear is that JP Morgan’s latest firm acquisition in October makes a shift in the traditional financial firms, demonstrating that digital innovation significantly influences a firm’s competitiveness over the short and long term.

The acquisition of WePay is not the first one made by JP Morgan in the fintech sector, but it is certainly the major one. Over the last few years, the bank has invested in some other fintech companies such as Bill.com, LevelUp, OnDeck Capital and Prosper. However, in the case of its latest deal, the bank has decided not to just simply work or invest in the company but to acquire it for an estimated price of more than $220 million. The reason why the bank has decided to acquire the whole WePay – and not to just work or invest in it – lies in the fact that this acquisition allows JP Morgan to have immediate access to the prior company’s payment technology, consumer base and knowledge. JP Morgan Chase & Co. announced that it plans to roll out the technology of WePay to JP Morgan’s four million small business customers to give them the ability to accept digital payments instantly and to get paid faster. For the bank, this is an opportunity to push more its products and services to a wider audience.

This purchase can be considered as a Win-Win acquisition since WePay and the bank can lower payment restrictions for both providers and merchants. In particular;

  • software providers will be able to provide instant on-boarding to small business clients with the fraud protection of JP Morgan Chase & Co;
  • Chase and WePay can allow merchants to accept payments instantly and so to get paid in less time to never lose a sale;
  • software platforms will become easily payment facilitators.

It is worth mentioning the statement made by Matt Kane, CEO of Chase Merchant Services, about the recent acquisition: as he claims, “with WePay, Chase is taking the work out of payments for both our business clients and the software providers who serve them. We are powering payments for growth, so businesses can accept payments instantly, get paid faster, and never lose a sale. And we will give ISVs a payment facilitator-like experience without the overhead or increased fraud risk.” This acquisition follows the firm’s previous announcement in September in which JP Morgan Chase & Co. led a $100 million investment in Bill.com, which is partnered with to help business clients to make and receive digital payments. Other than big businesses, the purchase of digital platforms by leading financial institutions can also have positive consequences for small businesses.

This year the American bank has also acquired the technology of Mcx, a mobile payment company, and signed a deal with On Deck Capital in 2016 to help small business make loans. Therefore, all past fintech acquisitions, together with the latest one with WePay, are demonstration that JP Morgan Chase and Co., like also other global financial services firms, have exploited new opportunities to remain global leaders in their sector. Being innovative and offering better services, especially through digital tools, is certainly one key factor of today’s competitiveness in the market.

JP Morgan & Co. is not the only bank that is moving in this sector, but also other important leading financial institutions or tech companies are recently making acquisitions in the fintech industry. In 2017, 166 deals were made regarding payments companies for a total value of $29.3 billion, a primacy regarding the fintech sector. As an example of this trend, it is worth mentioning the recent acquisition of the Britain group Worldpay, a payment processor, by the credit card processing company Vantiv for a $10.4 billion. Moreover, it is said that a Bernstein analyst predicted PayPal’s billion investment in a payment company, such as Square, Stripe or Adyen, in the next few months.



  • anonimous

    Nice article, Mr. Babbaro.


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