JPMorgan has reportedly told FinTechs it will begin charging for access to customer bank info.
That’s according to a report Friday (July 11) from Bloomberg News, which noted these fees from the largest American bank could amount to hundreds of millions of dollars, threatening the FinTech sector’s business model.
The bank has sent pricing sheets to data aggregators — which connect banks and FinTechs — explaining the new charges, the report said, citing sources familiar with the matter. Those sources say the fees will depend on how the companies use the information, with high prices expected for payments-focused firms.
According to the report, the fees could be levied against the aggregators that connect FinTechs and banks, and pass to the FinTechs and — eventually, consumers.
A spokesperson for JPMorgan told Bloomberg the bank has invested heavily to develop a system that protects consumer data.
“We’ve had productive conversations and are working with the entire ecosystem to ensure we’re all making the necessary investments in the infrastructure that keeps our customers safe,” the spokesperson said in a statement.
The fees are expected to go into effect late this year, but aren’t final and could be negotiated, the report added. But the changes would present an upheaval for FinTechs like Coinbase, Venmo and Robinhood, which rely on the ability to access customers’ bank accounts.
The report noted that this issue is playing out against the backdrop over the uncertain fate of Section 1033, the so-called “open banking rule.”
Finalized last year by the Consumer Financial Protection Bureau (CFPB), lets access their data, and requires banks to share that data with other lenders or financial services providers for free.
Supporters of the rule say it gives customers greater access to financial services and protects data security. The banking sector contends these changes could bring about fraud and expose them to greater liability.
However, the future of the rule is now up in the air, with the Republican administration asking a federal judge to vacate the rule.
As PYMNTS wrote earlier this month, this regulatory uncertainty is one example of the way open banking is proving to be a work in progress in the U.S.
Research by PYMNTS Intelligence shows that 46% of consumers would be “highly willing” to use open banking options for bill payments and financial services. However, only around 1 out of every 10 Americans have used open banking payment options, which leaves an untapped market of roughly 90%.
“The opportunity may be vast, but so are some of the challenges faced by providers,” the report added. “Instant payments are part of the open banking landscape, helping underpin consumer facing and B2B use cases.”
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