In a move to counter the persistent and rapid rise of competition from fintechs, JPMorgan Chase, the largest bank in the U.S., is directly striking Square and PayPal with the release of its own competitive products. Aiming to keep market share and sell more services to millions of American small business owners, JPMorgan will roll out a checking account paired with a fintech-inspired service called QuickAccept.
With QuickAccept, businesses and vendors will now be able to process card payments within minutes through a mobile app or contactless card readers. Simultaneously, users will be able to see sales recorded on their Chase accounts on the same day. Consumers also have the benefit of being offered same-day deposits with no charge to those with Chase accounts.
This offers Chase a point of difference given that charge fees are a lucrative income source with Square, for instance, charging 1.5% fees for instant transfers. Following Chase’s acquisition of WePay in 2017, the bank will be releasing its very own QuickAccept card reader, a hardware device that will process card payments via tap, dip, and swipe.
Affirming the planned competitive advantages, Max Neukirchen, CEO of JPMorgan’s Merchant Services Division said, “Our competition either doesn’t have same-day funding, or they charge for it. We think it’s a great differentiator for business.”
That said, there are still fees to be made for processing with the bank charging 2.6% plus 10 cents per tap, dip, or swipe transaction, and 3.5% plus 10 cents per transaction that is keyed into the mobile app. The card reader will cost $49.95. Merchants will be able to bypass the fees for the service if they can keep up a daily balance of $2,000, maintain $2,000 in QuickAccept volumes, or spend $2,000 on a small-business credit card.
It appears this move has been premeditated for some time since the creation and swift growth of Stripe caught the eye of JPMorgan CEO Jamie Dimon who said, “They did all the stuff we could have done that we didn’t” with regards to the card payments facility in a 2019 investor conference.
The timing also comes as the pandemic has shown to be extremely lucrative for the bank’s fintech competitors, with Square and PayPal virtually taking market share from traditional banks as cash payments have rapidly declined. Square shares dropped 4.3% the Wednesday following the announcement.
JPMorgan will migrate a “large portion” of its over three million small business customers to the unit. In particular, it will target customers with less than $500,000 in annual revenue seeking to avoid paying fees.