JPMorgan Takes Over Volkswagen’s Payments Platform

Image Credit: JP Morgan

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

America’s biggest bank now owns the keys to its very own Volkswagen…payment software.

JPMorgan Chase announced Wednesday it is buying a 75% majority stake in Volkswagen Payments, extending an acquisition spree designed to stem the pains of low interest rates on its core business.

A Wallet for a Car

The VW acquisition is the bank’s latest — and most ambitious — step into the auto sector. JPMorgan already has financing partnerships with Jaguar Land Rover and Subaru, but VW Payments is a more ambitious dice roll.

VW’s unit, which JPMorgan plans to rebrand, lets drivers pay for parking, fuel, electric-vehicle charging, insurance, and in-car entertainment right from the driver’s seat with in-vehicle payments. Already up and running in 32 countries, the service essentially turns a car into a digital wallet that can transact at thousands of gas and charging stations.

And JPMorgan plans to expand the use of the software beyond auto-related purchases, as well as opening it up to other car brands to capitalize on an emerging sector:

  • According to research group Grand View, the in-vehicle payment market will reach $4 billion in 2021.
  • VW doesn’t separate earnings for its payments unit, but mid-year statements in July said sales at the automaker’s financial services division were $27 billion, an 18% increase from 2020.

Dimon Deals: The transaction syncs perfectly with JPMorgan’s current business strategy. As record-low interest rates dealt a blow to its core banking services — net interest income was down 8% year-over-year in the second quarter — longtime CEO Jamie Dimon has responded with a tried and true strategy: diversify.

The bank has already matched last year’s deal volume with at least 34 acquisitions thus far in 2021. Purchases include California-based ethical investments platform OpenInvest, British digital wealth manager Nutmeg, and forest management company Campbell Global.