JPMorgan Chase to Charge Fintechs for Data Access, Sparking Industry Backlash

JPMorgan Chase has announced that it will begin charging fintech companies and data aggregators for accessing customer account data. This decision has sparked significant controversy and concern within the fintech and crypto industries, as it could impose substantial financial burdens on startups and intermediaries that rely on low-cost data access.

The move by JPMorgan is expected to impact key fintech platforms like Plaid and Yodlee, which act as intermediaries between traditional bank accounts and crypto wallets. This, in turn, affects crypto onramps like Coinbase and Gemini, as these platforms may face increased operational costs. Industry leaders have expressed concerns that these additional costs could stifle startup growth and limit user accessibility to financial services.

Tyler Winklevoss, co-owner of Gemini, has criticized JPMorgan's decision, accusing the bank of attempting to stifle the crypto and fintech industries. Winklevoss argues that JPMorgan and other Wall Street entities are launching an assault on open banking and the third-party applications that facilitate crypto access for millions of users. He specifically mentioned that the bank is targeting companies like Plaid, which act as intermediaries between traditional bank accounts and crypto wallets, thereby affecting platforms such as Gemini, Coinbase, and Kraken.

Winklevoss asserted that JPMorgan aims to eliminate free access to banking data and replace it with substantial fees. These fees would devastate startups that assist users in transferring funds into crypto, including third-party aggregators, fintech bridges, and other entities operating under Section 1033 of the Consumer Financial Protection Act. He warned that JPMorgan is actively suing the Consumer Financial Protection Bureau to eliminate the Open Banking Rule, thereby restricting data access entirely.

Last month, JPMorgan informed fintech companies of its plan to charge fees for accessing customer account data. This means that any transaction involving the transfer of funds from a JPMorgan Chase account to a crypto exchange would incur charges for the intermediaries providing the technology, such as Plaid or MX. These costs are expected to be passed on to clients, potentially even reaching consumers. Some fintech companies have expressed that the fees could be higher than their earnings over an entire decade, necessitating a 1000% price increase to cover the costs. Smaller startups would be unable to serve customers who bank with JPMorgan under these conditions.

Arjun Sethi, co-CEO of Kraken, criticized JPMorgan for treating customer data as a product, stating that once data becomes a revenue stream, the goal is to fragment, lock it in, and sell it at a margin. Winklevoss's post on X sparked numerous responses, with users sharing experiences of JPMorgan blocking wire transfers to crypto exchanges and expressing concerns about the bank's control over financial data. Some users also highlighted the risks of sharing bank login credentials with third parties, emphasizing the potential for exploitation.

Jamie Dimon, CEO of JPMorgan Chase, has previously expressed his disdain for fintechs, warning during a 2021 analyst call that traditional banks should be wary of startups like Plaid. He predicted brutal competition over the next decade and expressed confidence in JPMorgan's ability to win. In his annual shareholder letter, Dimon indicated that a battle with third-party aggregators was imminent. He proposed that JPMorgan is willing to share data but only under its terms, with customers authorizing all data usage and being fully informed about how their data is being used. Dimon argued that companies like Plaid are exploiting bank data for profit and should be required to pay for using JPMorgan's infrastructure.

During JPMorgan's earnings call, Dimon mentioned that maintaining APIs and ensuring system security incurs real costs. However, critics view this as an attempt to eliminate competition rather than protect customers. The bank has already notified Plaid and other aggregators about the impending fees, although the exact cost remains unknown. Some analysts believe that companies like PayPal and Block may be exempt from these fees due to pre-existing agreements with JPMorgan, but others consider this view overly optimistic.