Chase Moves In On Fintech WePay

by Raymond Pucci 0

Fintech M&A deals continue to be a hot spot in the payments world as software technology drives payment transactions and related services. As reported in the following article, Chase Merchant Services plans to acquire growing fintech WePay.

J.P. Morgan Chase JPM +0.59% & Co. said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup. The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.

The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising. FTV Capital led that round, with participation from Japanese e-commerce company Rakuten and earlier investors including Highland Capital Partners, August Capital, Continental Investors and Ignition Partners.

The growing popularity of e-commerce and mobile shopping has fueled deal making in the payments sector of late. There have been 166 deals involving payments companies in 2017 for a total of at least $29.3 billion, the most in any segment of fintech, according to investment bank Financial Technology Partners LP.

Even though J.P. Morgan, led by CEO James Dimon, hasn’t made many large acquisitions of fintech companies, it has been an active investor in startups there. Over the past 12 months, it participated in a $100 million fundraising for business-to-business payments firm Inc. and a $50 million fundraising for LevelUp, which enables customers to pay at restaurants and coffee shops using their smartphones.

Global e-commerce transactions are complex for merchants that are dealing with a different mix of currencies, languages, banks, and payment types. Software enabled, application programming interfaces (APIs) facilitate this process and handle the nitty-gritty payment details that no merchant really wants to worry about. Without this software facilitation, checkout abandonment and lost sales become the major pain point for online sellers. WePay is a fintech that can hit the deck running and sync very nicely with Chase’s very large stable of merchant clients, especially those in the small to medium class.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Goup

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