JPMorgan rolls smartphone card reader service to rival Square

JPMorgan Chase is making a play to sell more services to millions of American small business owners, pushing into an area pioneered by FinTech firms including Square, PayPal and First Data. CNBC's Hugh Son joins "Squawk Box" to discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

JPMorgan Chase is making a play to sell more services to millions of American small business owners, pushing into an area pioneered by fintech firms including Square, PayPal and First Data, CNBC has learned.

The bank is rolling out a checking account that is paired with a new fintech-inspired service called QuickAccept, according to JPMorgan executives. QuickAccept lets merchants take card payments within minutes, either through a mobile app or a contactless card reader, and users will see sales hit their Chase business accounts on the same day.

That fast funding is offered free, unlike competitors including Square, which typically take a day or more and charge a 1.5% fee to make instant transfers.

“Our competition either doesn’t have same-day funding, or they charge for it,” Max Neukirchen, CEO of JPMorgan’s merchant services arm, said in an interview. “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.”

The move shows that JPMorgan, the biggest U.S. bank by assets, isn’t content letting newer rivals monopolize emerging trends. Small merchants struggled with point-of-sale card transactions until 2009, when Twitter co-founder Jack Dorsey came up with the idea for a piece of hardware that attached to smartphones. That was the launching point for Square, and now the company manages $100 billion in payment volumes annually and has an $83 billion market capitalization.

That swift ascent caught the eye of JPMorgan CEO Jamie Dimon, who mentioned Square during a February 2019 investor conference. “They came out with this whole dongle to process stuff and it was a great idea,” Dimon said at the event. “They did all stuff we could have done that we didn’t do.”

Square shares dropped as much as 5.5% Wednesday.

Besides Square, PayPal is a major player in this arena. The payments firm, which first gained traction as the rails for eBay sellers, now has 346 million active accounts globally. Another player is Clover, an Andreessen Horowitz-backed start-up that was acquired by First Data in 2012. First Data was later bought by Fiserv.

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