JPMorgan Chase is introducing free same-day deposits to its business banking clients that use WePay, a fintech that connects payments solutions with bank networks, which Chase acquired in late 2017 for $400 million. The feature is already available to some clients and will be fully rolled out by the end of the year.
Bill Clerico, CEO and cofounder of WePay and head of small business products at Chase Merchant Services, hinted that Chase will be rolling out more products through WePay soon, noting that same-day deposits are “the first step in bringing the results of that investment to the market.”
Same-day deposits could increase Chase’s customer acquisition and lifetime value among small- and medium-sized business (SMB) customers:
- Payment companies have been encroaching on the banking realm — and this feature can help it better thwart off their threat. Major payments tech company Stripe just moved into lending by launching Stripe Capital, a service providing SMB loans to sellers on its platform, while Square has issued over $5 billion in SMB loans since it began offering them in 2014. At the same time, neobanks like N26 and Revolut are emerging with competitive offerings of their own. It’s therefore becoming more important for major banks to invest in areas like lending and payment processing to mitigate the threat of third-party providers undercutting them on volume from potential SMB clients — a lucrative customer segment.
- Further, Chase’s acquisition of WePay made it the only major bank with a wholly-owned payments business — and the addition of this offering could cement its lead. Funds through Square and Stripe can take one to two business days to get to a merchant, with both companies charging fees for faster access to funds: Stripe charges 5% to make an instant payment, while Square introducedInstant Deposits in 2015 at a 1% fee. Offering free same-day deposits could aid Chase in new client acquisition and propel its SMB customer segment by addressing a pain point: 61% of SMBs globally struggle with cash flow, according to an Intuit study. The firm has stepped up its offerings catered to this customer segment — Chase recently made an undisclosed investment in Toronto-based small business accounting software provider FreshBooks — which free instant deposits could further.
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