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JPMorgan will purchase a 75% controlling interest in the Volkswagen payments service, with the automaker maintaining a minority percentage.
JPMorgan Chase & Co (NYSE: JPM) announced on Wednesday that it intends to buy a 75% stake in the Volkswagen payments business. The move is the latest in a series of acquisitions and investments by the leading American bank in 2021. As per the deal, JPMorgan’s wholesale payments business will assume control of the Volkswagen payment division. Both parties expect to finalize the deal in the first half of 2022.
JPMorgan hints that the venture’s branding may change upon completion of the deal. Also, the banking and financial services giant says this recent acquisition will help it expand its digital payment capabilities. In addition, the Volkswagen deal eases JPMorgan into the automotive space for the first time. Both companies see this venture as the beginning of a long and mutually beneficial collaboration. In fact, JPMorgan looks to aid the German automakers in developing a wider market coverage beyond the automotive industry. According to Shahrokh Moinian, EMEA head of wholesale payments at JPMorgan:
“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.”
“…continue to facilitate payments across the Volkswagen network in support of all Volkswagen Group brands globally.”
Volkswagen Payments Service Finally Attracts Attention via JPMorgan Acquisition
Back in 2017, Volkswagen established its payments arm, which currently operates across 32 countries. The platform allowed customers to perform a wide range of automated self-service functions. These included the buying and leasing of cars, payment of parking tickets, and electric vehicle charging.
Volkswagen Payments’ primary focus is on “digitally connecting the auto ecosystem”, and enhancing the payments experience for its production chain. These include consumers, distributors, and suppliers.
Unfortunately, the JPMorgan-Volkswagen announcement did not seem to boost the share value of the car company which was down over 2%. The reason for the dip may be attributed to a general slump in European markets.
JPMorgan, earlier in June, agreed to buy British robo-advisor Nutmeg for an undisclosed sum. The banking giant aims to use this to facilitate its digital retail bank brand in the United Kingdom. JPMorgan also agreed in June to buy OpenInvest, an ESG investing platform start-up based in San Francisco. OpenInvest focuses on ethical investments.
JPMorgan is one of America’s ‘Big Four’ banks, along with Bank of America, Citigroup, and Wells Fargo. Its CEO Jamie Dimon is one of the few billionaire bank executives with a net worth of $1.8 billion.
Volkswagen did not disclose a breakdown of earnings for its payments business in the first half of the year. However, the prominent car manufacturer said sales at its financial arm hit 22.6 billion euros ($26.77 billion). Interestingly, this figure represents an increase of 18% from the previous year.