Why JPMorgan Is Hitting Fintechs With Stunning New Fees For Data Access
J PMorgan Chase, the biggest bank in America, has been angry for years about being forced to hand over customer data to fintech companies for free. Now its billionaire CEO Jamie Dimon seems to be capitalizing on a moment of deregulation to slap fintechs with new fees, and the coming negotiations will determine how much damage the behemoth inflicts on their businesses. The bank's aggressive move is a big escalation in the ongoing battle between financial services incumbents and challenger fintechs.
Since the start of the fintech industry, upstarts have needed access to consumers' bank data to perform basic functions like transferring money and making budgeting recommendations. Data aggregators like Plaid and MX emerged over a decade ago to fill that need. They make software that bridges bank-to-fintech connections and charge the fintechs for the service. Big banks, including JPMorgan Chase, have long given aggregators access to consumer data for free, complying with a Consumer Financial Protection Bureau (CFPB) rule that prohibited banks from charging for it. But in May, amid the Trump administration's crusade to vastly reduce regulation, the CFPB said it plans to repeal the rule.
Now JPMorgan Chase is essentially telling aggregators: You've built a nice business off of our data–now give us our cut. The scary thing for fintechs is the size of the fees. Chase first sent pricing sheets to aggregators earlier this month. While details remain hazy, the prices are steepest for payments-related data transfers and would require leading aggregator Plaid to pay an estimated $300 million a year in new fees, according to a person briefed on the pricing sheet. That's more than 75% of Plaid's 2024 revenue. Bloomberg first reported the news of the coming fees.
Have a story tip? Contact Jeff Kauflin at jkauflin@forbes.com or on Signal at jeff.273.
Plaid's head of corporate affairs Freya Petersen and JPMorgan Chase spokesperson Drew Pusateri declined to comment on the size of the fees.
Two fintech executives we spoke with for this article believe it's fair for JPMorgan Chase to charge something for data access. The data feed has cost the bank 'a lot of money' to set up and maintain securely, Jamie Dimon said last week. But the bank's real costs to create and operate the data connections remain a mystery, as does its method for coming up with the fees' eye-watering prices.
If the fees don't come down, they could make popular features uneconomical for fintechs to offer and leave consumers worse off, fintech executives believe. Miranda Margowsky, a spokesperson for the fintech trade organization the Financial Technology Association, says Chase designed the fees 'to crush competition, levy a tax on fintech innovation, and cement their power in the marketplace.'
JPMorgan Chase spokesperson Pusateri told us in a statement that the fees are a way to reign in the excessive number of times fintechs are pulling JPMorgan Chase's customers' data. 'We receive nearly two billion monthly requests for customer data from middlemen, and more than 90 percent of those are unrelated to a consumer using fintech services.' He added that the new fees 'will ensure that data is provided only when customers request it.' He also said Chase 'explicitly reserves the right to charge for data access in its current agreements with data aggregators.'
Petersen said Plaid has invested heavily to build its data connections, and it provides data 'only at the behest of consumers.' She added that the data belongs to consumers, not banks.
Sima Gandhi, a former fintech entrepreneur and early Plaid employee who's currently a senior advisor at regulatory consulting firm FS Vector, believes that Chase should instead develop a new data strategy that benefits consumers and passes fees on to them. For instance, Chase could create a premium feature and charge people, say, $1 a month for unlimited data sharing, in the same way that Apple charges for data storage. Chase has no plans to do that, Pusateri says.
What will other big banks do if Chase's new charges take effect? They'll likely copy Dimon and tack on fees too, rather than sit back and watch their biggest competitor exert more control and create a new revenue line. PNC Bank CEO Bill Demchak has already said he's considering levying data-access fees as well.
Now aggregators are praying that they can negotiate the fees down. It's possible that Chase is taking a President Trump-style approach to negotiating, starting high but being willing to go much lower. Allison Beer, the bank's CEO of Card Services and Connected Commerce, is leading the charge on the negotiations, according to a person familiar with the matter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
4 minutes ago
- Yahoo
Enphase Energy forecasts third-quarter revenue below estimates, shares fall
(Reuters) -Enphase Energy forecast third-quarter revenue below Wall Street estimates on Tuesday and said President Donald Trump's import tariffs had impacted its gross margin, sending the solar inverter maker's shares down more than 7% after hours. U.S. trade officials in April finalized steep tariffs on most solar cells imported from Southeast Asia, after American manufacturers complained that companies from the region were flooding the market with unfairly cheap goods. Renewable energy companies such as Enphase are also facing significant uncertainty as Trump pushes to repeal or modify tax credits for solar and wind energy projects. The Senate's massive budget bill that passed this month will make it harder to develop wind and solar energy projects. The legislation sharply reduces access to a 30% tax credit for solar and wind power projects that had been set to run until 2032, and which developers had relied on for future projects. Enphase Energy now expects third-quarter revenue of between $330 million and $370 million, with the midpoint coming in below analysts' expectations of $369.7 million, according to data compiled by LSEG. The company also forecast third-quarter gross margin of between 41% and 44%, lower than the 46.9% reported in the second quarter. However, it beat second-quarter profit estimates as the company benefited from strong structural demand in the broader solar industry. It posted an adjusted profit of 69 cents per share for the quarter ended June 30, compared with estimates of 62 cents. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 minutes ago
- Yahoo
GM Just Took a $1.1 Billion Hit -- And It's Only the Beginning
General Motors (NYSE:GM) is feeling the sting of President Donald Trump's trade policy. The automaker took a $1.1 billion hit from new tariffs, dragging net income down 35% to $1.9 billion. Adjusted EPS came in at $2.53above the $2.33 consensusbut well off the $3.06 posted a year earlier. That wasn't the only weight on margins: GM also absorbed $300 million in recall-related costs, $600 million from excess EV inventory, and $200 million from weaker fleet pricing. Notably, it's not passing costs on to consumersyet. Instead, the company is cutting expenses and reshoring some production to Michigan, Kansas, and Tennessee. Warning! GuruFocus has detected 2 Warning Sign with GM. Despite the squeeze, GM managed to grow U.S. vehicle sales and logged a $175 million improvement in China profits compared to last year. Still, EBIT in the core North American business fell by $2 billion, and revenue dipped 1.8% to $47.1 billion. The company acknowledged that only a third of its $4$5 billion tariff exposure is expected to be offset later this year. CEO Mary Barra framed the situation as a reset moment, pointing to the need to adapt to "new trade and tax policies" while navigating a "rapidly evolving tech landscape." The shift includes plans to bring more SUV and pickup production back from Mexico. For now, GM is sticking with its full-year EBIT guidance of $10 billion to $12.5 billionlower than the $15.7 billion target floated back in January. Evercore analyst Chris McNally flagged that steady forecast as a letdown for investors hoping for a rebound narrative. Still, with federal EV subsidies disappearing, a glut of unsold plug-ins, and trade friction rising, the flat outlook might reflect realism more than caution. GM may have avoided the worst-case scenariofor nowbut the road ahead remains anything but smooth. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
4 minutes ago
- Yahoo
Sauce Gardner delayed Jets deal to let Garrett Wilson have his moment. They want more wins together
FLORHAM PARK, N.J. (AP) — Sauce Gardner had already gotten a contract offer from the New York Jets that would make him the NFL's highest-paid cornerback when he received some more exciting news. He was working on a commercial last week when his marketing agent told him that teammate — and fellow 2022 first-round draft pick — Garrett Wilson also received a huge extension. Gardner called Wilson, the two spoke for a few minutes and Gardner made a cool play. 'I was like, I don't want to do my deal today,' Gardner recalled Tuesday as the Jets reported for training camp. "I told my team that we're not agreeing to it today. I want Garrett to have his day, this full day to himself to just feel good about himself and to spend that time with his family and stuff like that. 'I'll do mine tomorrow and that's how it went. And we were just very excited.' Wilson agreed to terms on a four-year, $130 million contract extension last Monday and officially signed the deal four days later. Gardner agreed to his four-year, $120.4 million extension last Tuesday and signed it after showing up at the facility a week later with the rest of his teammates. 'Me and Garrett were talking, saying how we've got to compete, how we've got to make it seem like we're underpaid still, you know?' Gardner said. 'So that's our mentality that we both have. Looking forward to it, man.' With the deals, the Jets made long-term commitments to two players considered foundation pieces with a new general manager in Darren Mougey and head coach in Aaron Glenn focused on building for the future. They both won rookie of the year honors for their side of the ball. Gardner was an All-Pro his first two seasons and remains one of the NFL's most highly regarded cornerbacks. 'I's a blessing, but it's only the beginning,' he said. 'Things that I've accomplished, that's all in the past. ... I know it's the floor, but there ain't no roof. The sky's the limit for me, and I'm very aware of that.' Wilson has more than 1,000 yards receiving in each of his first three years, the first player in franchise history to accomplish the feat. The Jets have the NFL's longest active playoff drought at 14 seasons, and that distinction gnaws at Gardner and Wilson despite all their individual achievements and accolades early in their careers. 'I've been here for three years, we haven't won many games,' Wilson said. 'I haven't had the season that I've hoped and for them to still come in here and believe in me and say, hey, we think you can be a part of the successful side of this thing for years to come is awesome. So I'm ecstatic, man, for real.' Gardner had a down year last season by his standards, but he's out to prove naysayers wrong. 'I'm Sauce,' he said. 'I mean that in the most humble way. Like, no matter what I do, they're going to make a huge deal out of it. I could miss a tackle — there's a lot of people that miss tackles — but I just understand that I'm me, so people are just going to blow things out of proportion. 'But even with them doing that, nobody's a bigger critic of me than myself.' And that drives him to be even better than what he achieved his first two seasons. 'I want to be the best,' said Gardner, who turns 25 on Aug. 31. "That's not just this season, but that's like in general, like my legacy that I want leave. I want to win games. And I think we have the players, the coaches and everything that it takes to win games — and to win a lot of games. So, you know, I'm just looking forward to that. That's my main thing. 'I know my individual accolades, those are going to come with us winning games.' Wilson, who turned 25 on Tuesday, has a similar approach — saying he needs to cut down on his drops, run cleaner routes and get into the end zone more. He acknowledged he dealt with frustration through the losing of his first three NFL seasons, but never doubted a deal would be done with the Jets. 'I've always kept my faith in that this thing's going to turn around and that I'm going to be a big part of why it does,' he said. "There's times where you have some days where you know are harder than others, right? I'm not superhuman. I've had days where I've been down and felt like things weren't going our way, my way, maybe. But the next day, I always kind of came back down to earth. 'Coming to work here with these people and people that believe in me, I don't take that lightly.' ___ AP NFL:
