Wednesday , August 12, 2020

Chase To Acquire WePay in a Play for ISVs and New Merchants

JPMorgan Chase & Co. is making a big move into the world of independent software vendors and payment facilitators with a planned acquisition of WePay Inc. that the nation’s largest bank announced late Tuesday.

Redwood City, Calif.-based WePay develops payments-related application programming interfaces (APIs) for software developers to put into their own programs, and it also is a payment facilitator that enables small businesses without their own merchant accounts to submit card transactions for authorization and settlement. Among its 1,000-plus partners are event-management firms such as SignUpGenius, fund-raising platform GoFundMe, and email services provider ConstantContact.

“With WePay, Chase is taking the work out of payments for both our business clients and the software providers who serve them,” Matt Kane, chief executive of Chase Merchant Services, said in a news release. “We are powering payments for growth, so businesses can accept payments instantly, get paid faster, and never lose a sale. And we’ll give ISVs a payment facilitator-like experience without the overhead or increased fraud risk.”

JPMorgan Chase operates the nation’s largest bank-owned merchant-acquiring business, which is on track to exceed $1 trillion in payment volume this year. In addition, Chase serves 4 million small businesses with banking services, business credit cards, or merchant processing. Putting WePay under Chase’s roof will enable the bank to offer more software-based services to small businesses, and fend off keen competition from rising financial-technology companies in the payments space such as Stripe Inc.

Neither WePay nor JPMorgan Chase revealed the purchase price, but The Wall Street Journal said it could exceed $220 million.

Jared Drieling, director of business intelligence at Omaha, Neb.-based merchant-acquiring consultancy The Strawhecker Group, tells Digital Transactions News by email that the acquisition for Chase is “a technology play in order to offset the impact of emerging players such as Stripe, etc., and to better compete with the more technology-focused payments players by offering more open integration and customizable payment solutions through WePay’s API platform businesses.”

Drieling adds that “this is just another piece of evidence that showcases the ISV payments opportunity. There is a gold rush within the payments community to acquire integrated payment assets.”

For WePay, the acquisition means access to a sizable base of potential customers as well as JPMorgan Chase’s financial resources.

“With Chase behind us, we’ll continue to focus on serving the unique needs of software platforms, with a team that will double in size over the next year,” chief executive Bill Clerico said in a blog post. “We’ll quickly become one of the most well-financed payments-technology companies in the world—and beyond that, we’ll serve as a platform for Chase to grow its footprint in fintech and Silicon Valley, all while continuing to operate with autonomy under the WePay name.”

Clerico and chief operating officer Rich Aberman founded WePay nine years ago when they were both age 23.

Researcher Rick Oglesby, president of Mesa, Ariz.-based AZ Payments Group, says in an email that “WePay is a great asset and will be a great addition to Chase’s ISV business. WePay provides an out-of-the-box solution that’s quick and easy for ISVs to adopt and loaded with value-added tools, so it will add services to Chase’s traditional processor-oriented solutions.”

Chase already enables ISVs to become payment facilitators, and having WePay in-house will make it even easier for software developers to provide payment services to their business customers, Oglesby adds.

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