Payments are the “glue”

The entire week JPMorgan, the biggest US bank, was all over the Greek news. This weekend it was mentioned countless times in Greek parliament by the prime minister and several other cabinet members, during the no-confidence vote initiated by the main opposition leader. Last Monday, JPMorgan announced that it agreed to acquire a 49% stake in the Greek fintech Viva Wallet. This was really big news for the company, its employees, and the entire local startup ecosystem because it turned Viva into the first Greek unicorn, valued close to $2 billion. In the last ten years the Greek startup scene has been picking up steam and 2021 was a record year for the country in terms of investment, with over half a billion euros in funding. JPMorgan’s investment in Viva is part of its overall strategy of tapping into fintech startups not just for investment, but for growing its business more directly. In 2021, JPMorgan Chase was on a buying spree, investing in more than 30 companies, both big and small, to secure its present and future leadership. JPMorgan Chase has announced that in 2022 it will spend more than $12 billion on technology. That’s some serious money coming into fintech.

Ilias Louis Hatzis is the founder and CEO at Kryptonio wallet. Please participate in our Crypto Wallet Survey, we could use your help. It’s seven simple multiple-choice questions about crypto wallets and you should be done in 60 seconds. The survey is completely anonymous.

When Andreessen wrote that software will eat the world, he was right. Eleven years later, software may control our physical and digital worlds, but every software platform depends on payments. From online marketplaces and streaming videos to cross-border money transfers, almost every digital activity relies on a payment system.

It should come as no surprise that while global economies contracted in 2020, fintech grew. In Europe alone, fintech apps adoption and usage jumped by 72%. In Africa, there are already at least six payments and fintech unicorns.

In 2021, global fintech investment set a record high, reaching $132 billion in 2021, an increase of 168% from 2020.

Payments are more than just a transaction
Historically, banking and payments have been separate, but the truth is that banking and payments are one and the same. Banks that can do both banking and payments will likely be most relevant in the new economy.

JPMorgan has been using its resources to beef up its presence in the payments ecosystem, through investments and partnerships over the last few years.

In 2015 it launched its own digital wallet, Chase Pay (shutdown in 2021). In May 2017 it co-led a $50 million investment in LevelUp, an order-and-pay-ahead app. It brought its peer-to-peer payments product, Chase Quick Pay, onto Early Warning Services’ Zelle network. It invested in Bill.com to allow its customers to send and receive electronic payments and invoices. It spent $400 million to acquire small business payments company WePay.

Last September JPMorgan acquired a majority stake in Volkswagen’s payments business, as it eyes a huge opportunity in the mobility ecosystem. JPMorgan plans to leverage Volkswagen’s payments capabilities across the automotive sector. By 2030, about 95% of new automobiles globally will be connected. Imagine that you’ll drive out of a parking lot and your car pays for the parking.

The Viva deal
Viva Wallet, founded in 2000, serves small and medium-sized businesses in 23 European countries. The company offers merchants services that include card acceptance through a point-of-sale app, bill pay, merchant cash advance, expense management, virtual debit card issuance. Viva Wallet also obtained a banking license in 2020, when it bought Praxia Bank, Greece’s first digital bank.

JPMorgan’s investment in Viva Wallet reaffirms the bank’s emphasis on speeding up its payment solutions, but more importantly, Viva gives JPMorgan an edge.

–  Viva Wallet has its own banking license as a result of the acquisition of Praxia Bank in August 2020 which allowed the company to offer lending and support merchants to improve their working capital. Viva’s banking license could be handy if JPMorgan decides to increase its stake.

– Viva Wallet gives JPMorgan a footprint in 23 European countries and allows it to take advantage of Viva’s local market expertise with merchant onboarding to expand its acquiring business and offer merchant credit.

– Viva’s roots are in technology, building payment technology for small businesses. Viva has built innovations, such as Tap-to-Phone, that can turn any mobile device into a terminal. Also, Viva recently acquired a 33.5% stake in N7 mobile, a software development company in Poland. In Viva, JPMorgan finds a partner with a solid background in building technologies.

In October, JPMorgan unveiled Chase Payment Solutions for SMBs, by combining Chase Merchant Services with WePay. In the US, JPMorgan Chase serves more than 4 million SMBs and in 2020 processed more than 27 billion transactions with a value of $1.4 trillion. The strategic investment in Viva Wallet will set the stage to develop future international products and services for European SMBs.

The world has gone digital and payments are the glue
The pandemic accelerated trends in digital behaviors across almost every industry. When you think about the rise of e-commerce last year, global e-commerce jumped to $26.7 trillion because of COVID-19. These trends are unlikely to change. During the pandemic, many folks were forced to use digital channels for the first time, For example, in 2020 about 40% of online grocery shoppers were first-time users. Two years later, those digital channels have become the norm for purchasing and consuming.

Fintech is the key to disrupting payments and JPMorgan knows. It has spent more on technology in two years (2018-2019) than the total investment in all European fintechs in 2019 and will it continue to invest big money to ensure it stays competitive and capitalize on the $450 billion opportunity for “wallets on wheels.”

Payments are the glue that will connect consumers and let them transact through connected devices that serve as wallets, like cars, homes, or wearable technology, across physical, digital, and virtual worlds.

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Source: https://dailyfintech.com/2022/01/31/payments-are-the-digital-glue/