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JPMorgan Has Its Eyes On Square

Image via Patrick Tomasso on Unsplash

"They came out with this whole dongle to process stuff and it was a great idea," JPMorgan CEO Jamie Dimon said of Square at an investor conference in February of last year. "They did all stuff we could have done that we didn't do.”

Less than two years since those comments, JPMorgan has decided that using the dongle to process stuff is such a great idea that it wanted to take on Square and other payment providers such as PayPal and Clover, according to details revealed to CNBC. The bank is preparing to roll out a new service for small business owners that includes a checking account and QuickAccept, which allows businesses to accept card payments through an app or a contactless card reader.

In an attempt to steal business away from Square's popular service, JPMorgan is offering free same-day sales transfers to Chase business accounts. Square and other competitors currently charge a 1.5% fee for instant transfers, which typically take one or more business days to process.

"Our competition either doesn't have same-day funding, or they charge for it," CEO of JPMorgan's merchant services arm Max Neukirchen said. "We think it's a great differentiator for businesses because getting money into their account quickly is so important as they manage their cash flow."

Shares of Square, which has seen its market capitalization increase by more than $50 billion this year to nearly $80 billion, fell nearly 5% on the news. Shares of JPMorgan barely reacted to the news, closing the day down 1%.

Jen Roberts, CEO of the Chase business banking unit, said JPMorgan plans to move "a large portion" of its more than three million small business accounts to the new offering. The service is targeted for small businesses with less than $500,000 in annual sales that want to avoid paying fees.

"We know there are obviously those that are using competitors' products, we can see them settling into their deposit accounts," Roberts said. "Our hope is that through this more integrated experience, they will migrate their business over to QuickAccept through Business Complete Banking."

While JPMorgan makes a move at more tech-savvy companies such as Square and Paypal, they're already moving onto what they see as the next big thing—cryptocurrencies.

PayPal announced just yesterday that it would allow customers to store cryptocurrencies such as bitcoin in their accounts and use the funds to make purchases. The move makes PayPal, with its nearly 350 million active accounts, one of the largest companies to expand into cryptocurrencies by offering it as a payment solution. Square already offers users the ability to buy and sell cryptocurrencies through its app.

As traditional banks try to fight off fintech companies, time will tell if they follow them into the world of cryptocurrencies as well.

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