JPMorgan to bring payment processing in-house

CPS processed more than £300bn in card transactions last year

Financial services firm JPMorgan Chase will end its partnership on debit and credit card payments with vendor First Data after a strategic review of Chase Paymentech Solutions (CPS) found that both parties should operate separate businesses.

The review concluded that merchant acquiring and payments businesses were central to the strategies of both groups and fuelled the decision to cease the partnership two years before the end of the contract in 2010.

CPS was formed in 2005 via the merger of JPMorgan’s Chase merchant services unit and First Data's Paymentech merchant business. Last year, CPS processed more than 19 billion payment transactions, representing about $719bn (£363bn) in operational volume.

After the transition, JPMorgan will receive 51 per cent of CPS’s assets, including most employees, technology, customers, the Canadian and European operations and Dallas headquarters. First Data will keep the business generated mainly by small and medium-sized merchants and will merge it into its own payment processing division.

“With emerging opportunities in the global payments business, it makes good sense to bring our stake in Chase Paymentech business fully in-house,” said JPMorgan Chase's card services group chief executive Gordon Smith.

“Merchants are moving beyond traditional payment vehicles and we expect to be at the forefront of the industry, developing and investing in new forms of payments and related transactions that bring value to the merchant," said Smith.