JPMorgan Chase acquires payments fintech Renovite to compete with Stripe and Block
- ByStartupStory | September 12, 2022
According to the reports, JPMorgan Chase has agreed to acquire Renovite, a payments startup, in order to counter challenges from fintech companies such as Stripe and Block.
The bank being the major participant in the global payment scape confirmed that the acquisition of Fremont, California-based Renovite will accelerate their merchant services.
Even though JPMorgan is the world’s largest provider of merchant services by transaction volume, fast-growing upstarts like Stripe and Block have advanced in recent years as a result of soaring e-commerce sales and the development of alternative payment methods. According to global payments head Takis Georgakopoulos, who spoke to investors at a May conference,
JPMorgan’s merchant acquiring revenue stagnated last year, in part because it was behind in several e-commerce areas and provided fewer services than other fintech rivals, despite their juggernaut operations of $9 trillion daily across several businesses. “Changing that picture is a big story behind our investments,” Georgakopoulos vowed.
The Renovite purchase, originally reported by CNBC, is the latest in a series of fintech transactions announced by CEO Jamie Dimon. JPMorgan has bought at least five businesses since late 2020, ranging from an ESG investing platform to a UK-based roboadvisor, in addition to a number of smaller fintech investments.
Dimon has often warned conventional banks about the threat that fintech businesses represent, particularly in the highly competitive payments space. Fintech businesses have used payment processing for retailers as a wedge to help them establish ecosystems worth billions of dollars. They have also been more agile in enabling new payment options, such as those offered by Klarna and Affirm.
Dimon has had to justify his bank’s soaring expenditure this year as it invests billions of dollars in technology in the midst of a 25% stock drop caused by recession worries. The Renovite acquisition, for which no details were disclosed, demonstrates that the longstanding CEO is unfazed by criticism that he is overspending on technology.
According to Mike Blandina, the bank’s global head of payments technology, JPMorgan ran trials with Renovite as a vendor last fall but was so impressed with the startup’s products — particularly a cloud-based switch that routes payments to various providers — that it decided to acquire the company outright. The switch platform’s plug-and-play design allows JPMorgan to add new payment choices in a fraction of the time it used to take since it involves significantly less code, he explained in an interview.
While JPMorgan is generally satisfied to work with fintech and take tiny investments in them, Neukirchen believes that Renovite’s product is too vital not to own. The bank also wanted the firm’s about 125 engineers, who were based in India and the United Kingdom, to assist JPMorgan with its product plan, he added.
“Our clients really value choice; they want to offer many different payment methods to their clients, whether it’s Visa, MasterCard, but also Buy-now, pay-later, etc,” said Max Neukirchen, the firm’s global head of payments & commerce solutions. “The ability to turn on these very country-specific payments methods also helps us in our geographic expansion, because we don’t need to spend a lot of time building out local payment methods,” he also added.
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