JPMorgan Chase has just announced that it has purchased WePay, an online payment provider founded in 2008. With clients such as Constant Contact, Infusionsoft, and GoFundMe already using WePay’s service, the start-up will now have access to over four million of JPMorgan’s small business customers.
Although the details of the acquisition remain undisclosed, the Wall Street Journal is reporting that JPMorgan paid more for the start-up than its $220 million, 2015 valuation.
The acquisition comes as no surprise as payment processing companies like WePay, Stripe, and Square are poised to disrupt the banking industry by gaining the trust of merchants who are trending toward using payments-as-a-service software instead of relying exclusively on their banks.
Payments-as-a-service software enables payment processing companies to facilitate payments or to become third-party payment processors—services that are especially attractive to small businesses and merchants who rely on getting paid as quickly as possible and can’t afford to lose sales due to payment processing lag times or other issues.
While the purchase is being touted as JPMorgan’s first major fintech (financial technology) acquisition, the bank has already been collaborating with and investing in fintech firms. Earlier this year, JPMorgan announced its partnership with Bill.com, a cash flow management software system. In addition, it has recently extended its collaboration with the U.S.’s largest online small business lender, OnDeck Capital.
JPMorgan’s acquisition is part of its approach to stay on the forefront of the continual changes within the banking industry. CEO Jamie Dimon, in his annual shareholder letter, attributed the bank’s success to its efforts in investing in new fintech technologies, its in-house development of new fintech products, and its collaboration with fintechs firms.
Other financial institutions have been following suit as interest in fintech acquisitions has grown. Worldpay, another payments processor, was recently purchased for $10.4 billion by the credit card processing company Vantiv.