JPMorgan Chase, the largest bank in the United States, is ramping up its efforts to cater to small business customers with plans to introduce digital payroll processing services, a source informed CNBC.
Investment in Tech
The bank has selected Gusto, a San Francisco-based fintech firm, to provide the foundational technology for this upcoming feature, as confirmed by Gusto’s CEO, Josh Reeves. According to Reeves, customers using Chase’s payment solutions will soon be able to seamlessly access payroll services from the same platform they use for banking. This integration aims to simplify the user experience, with the same login and credentials applied across both services, creating a convenient one-stop-shop environment.
In recent years, JPMorgan Chase has invested billions of dollars in technology, positioning itself for fierce competition to secure the loyalty of American retail and business customers. This competition intensifies as fintech companies like PayPal and Square expand their offerings to encompass a wide array of financial services, posing a threat to traditional banks. Notably, both PayPal and Square already provide their own payroll services.
While JPMorgan has previously introduced fintech features like a Square-like credit card reader for small businesses and early direct deposit for consumers, its decision to partner with Gusto for payroll services reflects the bank’s strategy to leverage specialized expertise in this area. Small business owners frequently encounter complexities when handling payroll, often varying from state to state, and even within different cities and counties. Gusto’s experience in managing these intricacies makes it a valuable collaborator.
Role of Gusto
By opting for Gusto’s expertise, JPMorgan aims to expedite the launch of its payroll processing service, slated to go live by the end of 2024. This offering will handle salary disbursements, generate necessary tax documents and pay stubs, and facilitate filing with both local and national agencies.
Currently, JPMorgan boasts 5 million small business customers and over 200,000 users of its payment solutions, as disclosed by an insider familiar with the matter.
Gusto, founded in 2011, serves around 300,000 small and medium-sized businesses and held a valuation of $9.6 billion in its most recent assessment. The startup competes in a field populated by both traditional and newer providers, including ADP, Intuit, Paychex, and Rippling. This strategic collaboration positions JPMorgan Chase to enhance its offerings for small business clients while providing a valuable and streamlined service for its customers.