The initiative by one of the largest banks in the world is well received by merchants, as it would reduce the payment of high commissions to 0%.
Through Ruben Ramallo
23/09/2022 – 10.56hs
Jamie Dimon, The CEO of the largest bank in the US often comes up with new ideas that, when realized, will revolutionize global financial activity. One is that despite the reluctance it shows against cryptocurrencies, it has accepted the use of the blockchain protocol for certain banking transactions.
Dimon also recently made headlines when he warned of a possible “financial hurricane” that is forming, with unpredictable consequences for the world.
Now he is once again reviving the market with his latest directive, which has already crossed the boundaries of the entity, to cause massive controversy both within and outside the entity he leads.
On these days it was learned that Dimon had instructed an internal bank department to work on a system that would make credit cards replaceable. What is striking about the case is that other parts of the company do not see it so clearly and make it known.
According to the Financial timesThe order came from Dimon at a closed-door meeting at JP Morgan’s headquarters in November.
Dimon intends for the bank’s two main divisions to work together to create a new payment processing system that will help it cope with growing pressures from the booming fintech companies, which are much more agile in this field.
Jamie Dimon is the CEO of the largest bank in the US
Though his statement was made in his usual ironic style, it did little more than reflect the challenges big banks face as they try to modernize their technology.
The new system being developed by JP Morgan’s corporate and investment bank – a unit known by its acronym CIB – It would allow merchants to receive payments directly from consumers, eliminating the need for debit or credit cards and threatening the lucrative fees earned by banks and card companies such as Visa and Mastercard.
The curious thing is that after the announcement, inevitable tensions arose with JP Morgan’s consumer and community banking division -CCB-, which recorded more than $5 billion in card revenue in 2021.
However, Dimon believed it was better to risk existing earnings than to put non-bank competitors ahead of JP Morgan.
Somehow the CEO of JP Morgan is trying to prevent what happened before from happening again He acknowledged that JP Morgan should have built his own merchant mobile payment platform before Square, the fintech co-founded by Jack Dorsey and now renamed Block.
Last November’s debate lasted up to six hours and focused on how JP Morgan’s many powerful internal interest groups would divide the project. Executives in attendance included Daniel Pinto, the bank’s president and head of the CIB unit, as well as Marianne Lake and Jennifer Piepszak, who had recently been promoted to co-head of the CCB unit.
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The original plan was for the CIB unit to deal with technology and work with merchants, while the CCB unit would clarify protections for customers in the event of abuse or fraud.
Question from trader
JP Morgan’s entry into the bank payment system is meeting the demand from merchants such as: Amazon and Walmart, who complain that banks and card companies monopolize this type of operation, which is 1.8% per transaction in the US, according to payment consultant CMSPI.
The fact is that every time a card is swiped, the trader takes a little bit of money. According to the Nilson Report, US merchants paid approximately $110 billion in processing fees for $7.6 trillion in card transactions in 2020.
“If I find out that any of you are not sharing information with others, or that you are withholding information, you will be fired,” Dimon told the 15 or so executives gathered for the New York meeting, according to two people knowledgeable about the New York City meeting. Affairs. of the statements.