The acquisition of Renovite will help JP Morgan Payments improve its payments modernisation strategy and support its journey to the cloud. Upon closing of the transaction, Renovite will become part of JP Morgan Payments, which combines corporate treasury services, trade finance, card, and merchant services capabilities at the firm, delivering an integrated payments experience to clients across the economy.
Renovite focuses on cloud-native technology, having built six proprietary, cloud-agnostic, and payment token agnostic payments products to help their clients to optimise infrastructure, including switch, reconciliation, security, issuing, ATM, and testing. Renovite also has a presence in India and the UK and has supplied services to JP Morgan since 2021.
According to the official press release, as the Renovite platform integrates with JP Morgan Payments, merchant acquiring clients will be able to accept more methods of payments around the globe to help grow their business.
The acquisition of Renovite is further evidence of JP Morgan Payments’ commitment to global clients by continuing to deliver resiliency and optimised infrastructure. This acquisition complements the firm’s proposed strategic investment in Viva Wallet and the strategic partnership with Volkswagen Financial Services AG.
A merchant acquirer or acquiring bank (known as an acquirer) is a bank or financial institution that processes credit and debit card payments for businesses.
Acquirers enable merchants to accept and process credit and debit card payments from card-issuing banks within a card association or card scheme.
An acquirer is responsible for receiving card transaction details from a merchant’s terminal, passing these through to the card issuer via the card scheme for authorisation and completing the processing of the transaction.
Once a transaction takes place, the merchant’s terminal forwards the details on to the acquirer. The acquirer then authorises and completes the transaction by running the information through the card scheme, to the card issuer.
The acquirer will arrange the card transaction’s settlement and will typically credit the merchant’s nominated bank account with the funds in accordance with the service agreement. The acquirer will arrange the card transaction’s settlement and will typically credit the merchant’s nominated bank account with the funds in accordance with the service agreement.
According to S&P Global Market Intelligence, 208 bank and thrift mergers with an aggregate deal value of USD 77.5 billion had surfaced through December 20, 2021, up from USD 28.1 billion in 2020 and USD 58.4 billion in 2019.
While some larger banks have been actively pursuing opportunities to develop native digital capabilities, some partner and form joint ventures while others opt to acquire fintech platforms that can harness the benefits of existing scale while delivering on a better digital customer service experience.
Conversely, for fintech companies that have scale and achieved lofty valuations, the strategy going forward will increasingly be focused on acquiring smaller bank charters to compete more directly and fall under a traditional regulatory framework.
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