JPMorgan (JPM) fintech deal to acquire Renovite to battle Stripe and Block

The main entrance to JPMorgan’s headquarters in New York.

Erik McGregor | light flare | Getty Images

JPMorgan Chase has agreed to acquire a payments startup called Renovite to fend off threats from fintech companies such as Stripe and Block, CNBC has learned.

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

While JPMorgan is the world’s largest merchant services provider by transaction volume, fast-growing startups such as Stripe and Block have climbed the rankings in recent years, driven by booming commerce sales. electronics and the proliferation of new payment methods. Merchant acquirers are crucial behind-the-scenes providers that enable sellers to accept payments in person and online, retaining a small portion of each transaction.

Despite operating a payments juggernaut that processes more than $9 trillion a day across multiple businesses, JPMorgan’s merchant acquiring revenue stagnated last year in part because it lagged certain e-commerce segments and offered fewer services than some fintech rivals, said global payments chief Takis Georgakopoulos. investors at a conference in May.

“Changing that image is a big story behind our investments,” Georgakopoulos promised.

Shopping spree

The acquisition of Renovite, first reported by CNBC, is the latest in a series of fintech deals struck under CEO Jamie Dimon. Since late 2020, JPMorgan has acquired at least five startups, from an ESG investment platform to a UK-based roboadvisor, in addition to making a series of smaller fintech investments.

Dimon has repeatedly sounded the alarm about the threat fintech players pose to traditional banks, especially in the highly competitive payments game.

Fintech players have used payment processing for merchants as a wedge to help them build ecosystems that have garnered enticing valuations. They’ve also been generally more nimble in activating new payment methods like offers from Klarna and Affirm.

Dimon was forced to defend his bank’s growing spending this year as it pumps billions into technology amid a 25% stock plunge sparked by recession fears.

The Renovite deal, on terms that could not be determined, shows the longtime CEO isn’t deterred by fears he’s spending too much on technology.

Tests on recovery

JPMorgan experimented with Renovite as a vendor last fall, but was sufficiently impressed with the startup’s products — particularly a cloud-based switch that routes payments to various vendors — that it decided to upgrade. acquire the business outright, according to Mike Blandina, the bank’s global head. Head of Payments Technology.

The plug-and-play nature of the switch platform allows JPMorgan to add new payment options in a fraction of the time it previously took because it requires significantly less coding, he said. in an interview.

“Our customers really appreciate the choice; they want to offer many different payment methods to their customers, be it Visa, MasterCard, but also buy now, pay later, etc. said Max Neukirchen, the company’s global head of payments and commerce. solutions.

“The ability to enable these very country-specific payment methods also helps us in our geographic expansion, as we don’t need to spend a lot of time developing local payment methods,” he added. .

While JPMorgan is often content to partner with fintechs and take relatively small stakes in them, the bank felt Renovite’s product was too big not to own, Neukirchen said.

The bank has also coveted the company’s approximately 125 engineers, located in India and the UK, to help JPMorgan with its product roadmap, he added.


Leave a Comment