- JPMorgan Chase plans to acquire a controlling ownership stake in Volkswagen Financial Services, the German car manufacturer’s payments platform, the bank announced Wednesday.
- The New York City-based bank said the deal, which is expected to close in the first half of 2022, will expand its digital payment capabilities and extend the platform to "the broader auto industry for the first time." Financial terms of the transaction were not disclosed.
- The purchase comes as the nation’s largest bank continues to execute an "aggressive" acquisition strategy CEO Jamie Dimon put on the agenda last year.
JPMorgan called Volkswagen’s payments platform "a natural fit" for the bank’s wholesale payments business, which combines corporate treasury services, trade finance, card and merchant services capabilities.
The bank said over time the alliance between the two firms will seek to develop the platform for new markets and industries outside of the automotive sector "where mobility-focused payments will become central."
Acquisitions of payments businesses have increased since 2019, according to research firm Dealogic, as companies have realized the value of digitizing more payment processes, both in business-to-consumer and business-to-business channels. The deadly COVID-19 pandemic gave another boost to shifting those payments processes to digital paths that were contactless and could be initiated in work-from-home settings.
Volkswagen Financial Services will remain a shareholder and the platform will continue to facilitate payments across the Volkswagen network in support of all Volkswagen Group brands globally, the bank said. JPMorgan will own about 75% of the company.
"We plan to build on Volkswagen Financial Services’ innovative groundwork on the existing platform and apply the global scale of our payments expertise to meet evolving customer expectations in the auto space and beyond," Shahrokh Moinian, JPMorgan's head of wholesale payments in Europe, Middle East and Africa, said in a statement.
The deal comes ahead of a JPMorgan plan to roll out in-car technology that lets drivers automatically pay for fuel or tolls, Moinian told Reuters on Wednesday.
"One of the fastest-growing platforms is the connected car marketplace, whereby the car acts like a wallet for purchasing goods, services or subscriptions," he said.
Volkswagen Payments S.A., which was founded in 2017, operates in 32 markets and will continue to be based in Luxembourg, the bank said in a release.
JPMorgan’s latest acquisition comes as in-car payments are expected to reach $4 billion in 2021, according to a study by Grand View Research.
The deal is the latest in a series of investments the nation’s largest bank has made in the past year, following Dimon’s promise at the bank’s 2020 annual investor meeting that it would be "much more aggressive with acquisitions across the board."
The bank has made more than 30 acquisitions this year, according to the Financial Times, which cited data from Refinitiv.
Among the bank’s high-profile deals over the past year was the purchase of fintech 55ip in December, a Boston-based startup that helps financial advisers automatically create tax-efficient portfolios.
In June, JPMorgan agreed to buy British digital wealth management platform Nutmeg for a reported £700 million ($972.8 million). On making that purchase, the bank acknowledged it would launch a digital banking platform in the U.K. this year.
The bank also plans to purchase San Francisco-based OpenInvest for an undisclosed sum, the bank announced in June. OpenInvest, which helps financial professionals customize and report on values-based investments, will retain its own brand and be integrated into JPMorgan Chase's private bank and wealth management client offerings, the companies said.
JPMorgan has also turned its attention to the Brazilian market. The bank announced in June it plans to take a 40% ownership stake in the Brazilian digital bank C6. Financial terms of the transaction were not disclosed.