JPMorgan's payment upgrades include a soon-to-launch biometric feature.
JPMorgan Payments
JPMorgan Chase has made several recent moves in an effort to protect its position as the largest merchant acquirer in the U.S. — while warding off the payment technology firms that are looking to cut into the bank's business by offering easy-to-deploy payment technology.
The bank's most recent initiative is a new platform from JPMorgan Payments that integrates different payment channels while offering a set of technology tools that support checkout and other functions in stores, online and on mobile apps. A biometric product designed to support check-in and "phoneless" payments is also on the horizon.
By bundling these services, the bank hopes to draw a distinction between itself and the dozens of other sources of payment automation at a time when merchants may be reducing payment providers to cut expenses.
"Merchants are finding that their payment value chain has become very crowded and convoluted," said Jean-Marc Thienpont, managing director of omnichannel and biometric solutions at JPMorgan Payments, adding that retailers often use different products for e-commerce and in-store payments, along with different merchant acquirers. "It's not unusual in the U.S. and Europe for merchants to have four or five different providers."
Thienpont argues that this makes it harder for merchants to innovate across their entire business because they have to reconcile any multichannel upgrade among multiple vendors.
"Consumers want to be able to move from one channel to another without even thinking about it," Thienpont said. "They want to be able to reserve a product online and pick it up in a store, or buy online and return in a store, or shop in a store and order the product and pay for it from a self-service kiosk."
By combining hardware and software, along with JPMorgan's merchant banking products, the bank hopes to keep merchants under its own umbrella for payments, financial services and merchant technology.
One of the clients listed at launch is Sephora, which is using a JPMorgan Payments software development kit and Tap to Pay for iPhone to enable store staff to accept payments at any location in a store. Tap to Pay allows iPhones to accept payments without added hardware. Apple is not a payment processor, so the technology requires partners — in this case, JPMorgan. Other payment companies including Adyen, Stripe, PayPal and Block have adopted Tap to Pay, which is also referred to as softPOS.
JPMorgan additionally plans to add biometric authentication, having just completed a proof-of-concept test with Aramark. Consumers enroll, then pay at a cashier or self-service terminal by scanning their face or palm to complete checkout.
As merchants look to reduce checkout times via Tap to Pay and eventually checkout-free payments, controlling consumer check-in has become more important, since it can provide more insights into a consumer's behavior than just payment and purchase history. This enables retailers to redesign their stores to include more targeted marketing, providing an experience similar to an e-commerce site. Using a biometric record streamlines checking in, shopping and paying — making all three part of the same experience, Thienpont said.
"Biometrics can be used for check-in and checkout in places where speed is of the essence," Thienpont said, arguing that there are uses for retailers as varied as quick-serve restaurants and luxury shops.
JPMorgan is the largest merchant acquirer in the U.S., processing about 37 billion transactions in 2022, according to Statista research released at the end of 2023. Fiserv and FIS are close behind at 36 billion and 31 billion respectively. Wells Fargo processed about 10 billion transactions, Bank of America 9 billion and U.S. Bancorp/Elavon about 4 billion.
JPMorgan is one of the few banks, at least in the U.S., that is still directly involved in merchant processing, and one of even fewer doing it with its own technology stack, according to Aaron Press, research director of worldwide payment strategies at IDC Insights.
"JPMorgan Chase has long competed, in part, on the strength of its overall portfolio of financial services beyond merchant acquiring, but that value proposition has been eroded somewhat by the growth of fintechs offering embedded finance," Press said, referring to the practice of using an enrolled payment credential to cross-sell other financial services.
With its new technology stack, JPMorgan can mount a more direct and integrated response to the concept of embedded finance, Press said.
"The bank is in a strong position to directly offer additional products and services that merchants may need, such as working capital, private-label card programs, supply-chain financing, treasury services and others," Press said. "With bundled pricing … [it can] ultimately create more sticky relationships."
JPMorgan's other recent moves include launching the Payments Partner Network, a collaboration with Salesfore to enable merchants to access products from third parties that have integrated with the bank's payment platform. JPMorgan in 2022 acquired Renovite, which builds cloud technology for payments, accounting, card issuance and other functions. JPMorgan has also formed Onyx, an internal team that uses distributed ledgers to build payments and financial services for merchants and other clients.
The most distinctive thing about JPMorgan Payments is the integration with the cardholder side, which enables faster and cheaper settlement and better fraud prevention for those cases where the bank also has the merchant as its client, said Aaron McPherson, principal at AFM Consulting.
"This new offering consolidates and integrates a number of different products, both e-commerce and point-of-sale related, under one solution, while adding biometrics at the point of sale in the near future," McPherson said. "That seems to be where a lot of the innovation is, and I'll be curious to see how many merchants want to add that."
Correction
An earlier version of the story misspelled the surname of Jean-Marc Thienpont.
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