Incumbent banks conjure up images of cultural uniformity with their large, bureaucratic structures, but WePay, a Silicon Valley payments startup that JPMorgan Chase acquired in 2017 for $400 million, retains a startup feel two years after it became part of the bank.
According to co-founder Rich Aberman, WePay occupies a unique position in the Chase organizational structure. Its technology is supporting the evolution of Chase Merchant Services’ offerings to customers, and it functions as a beachhead for Chase’s expanding Silicon Valley presence.
WePay, which has 340 employees, is headquartered in Redwood City, Calif. It will be an inaugural tenant in Chase’s Silicon Valley fintech campus, which is slated to open in 2020.
“Chase acquired a business that still runs quasi-autonomously,” explained Aberman. “We’re integrated into the mother ship, but WePay has its own P&L and still operates as a cohesive unit within the broader firm.”
Chase Merchant Services has integrated WePay’s APIs to improve its value proposition to clients. WePay’s product offerings include Clear, a white label solution that integrates payments into clients’ applications; Link, a mechanism to refer merchants to Chase and monetize payments; and Core, a solution for software platforms who want to become payment facilitators and integrate directly with JPMorgan Chase. WePay also recently supported efforts to offer free same-day deposits to Chase’s business customers.
Aberman characterized the consequences of the acquisition as an expansion of WePay’s mandate rather than a “co-opting” of the technology. WePay, which was founded in 2008, began as a direct-to-consumer payments business. It subsequently shifted its focus to business-to-business payments in 2014, offering its APIs to third-party developers and software platforms to help them integrate payment services into their applications.
“[Chase] wants to help small businesses accept credit card payments. Whether those small businesses are originating from a Chase relationship, or whether they’re just signing up for software that has integrated payments with it, WePay’s technology is well suited to serve them,” said Aberman.
With the additional backing of Chase, WePay’s tools are integrated with a much bigger stack of banking product offerings, an approach competing firms like Square and Stripe are taking as well. Merchant services can’t exist in a vacuum and work best when integrated with other financial products offered by the bank, he explained. In the coming years, WePay plans to move further in its efforts to embed merchant services into the overall banking experience.
Aberman noted that through WePay’s efforts within JPMorgan Chase, the bank is able to position itself within clients’ business and financial services work flows, allowing them to seamlessly manage financial services and other business needs, with software fueling automation and the co-mingling of financial services and other operational tasks.
“Software is automating more and more of the operations of these businesses, and it just so happens that the same software knows a lot about your business and is in a better position to deliver traditional financial services with less friction,” he said. “[As a bank] we need to make sure that we lock in our position on the value chain and leverage the fact that software is integrating financial services to create more value for customers.”
Asked whether his perspective on fintech has changed after working within a bank environment, Aberman said he believes it’s hard to have a game-changing impact operating entirely outside of the banking system. WePay, having been incubated outside of the bank and now operating inside the institution, offers a distinct vantage point.
“If you believe in [open banking], I don’t think it’s possible to win that race, or have that transformative impact, as a pure fintech outside of traditional retail banking — but on the flip side, it’s impossible to precipitate that revolution within a bank,” he said. “You need something in between. WePay is very much a part of the bank, but from an execution perspective and from somewhat of a vision perspective, we sit outside.”
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