On Wednesday (March 20th), Ron Karpovich, Global Head of eCommerce Solutions at JPMorgan Chase, who calls himself on Linkedin “a specialist in Cross-Border Payments for corporate and institutional clients”, said in an interview that there was a big difference between trading cryptocurrencies and using the blockchain technology on which they are based to make payments “faster and cheaper.”
The first question was how JP Morgan’s margins would be affected by “disruptors” (FinTech startups) which say that “they can do the same things that establishment banks can do, but with lower fees.”
“Well, ultimately behind the scenes, they are going to have to use a bank to move funds. There’s more partnership instead of competition in that space. When it comes to margins and capabilities, payments is never something that grows in margin. Nobody wants to pay for a payment. That’s one of the hardest parts of this process: you have limited resources and capability to sell; so you need highly efficient and large players. There’s so much consolidation in the payment space, mainly because there’s a requirement to just have good efficiency in your ability to make payments.”
He was then asked how far away we were “from the time that e-commerce consumers would be making payments through the blockchain”.
“I think ultimately you will find that the technology behind the scenes will be blockchain. I don’t know that you’ll notice anything as a consumer in that space. I think you’ll still continue to use your payment type that you prefer, be that a wallet, be that a card, be that your bank account, but behind-the-scenes, the instantaneous nature of using a blockchain or using that type of technology will make your payment faster or cheaper in that space.”
The JP Morgan executive was then reminded how much of a cryptocurrency hater Jamie Dimon, Chairman and CEO of JPMorgan Chase, has been, and asked if the rollout of JPM Coin, which was announced on February 14th, meant that Dimon was “a convert now”.
Karpovich offered this reply:
“I think there’s a difference between trading a cryptocurrency that’s in the market that’s ubiquitous versus using the technology to enhance your payments infrastructure. We look at the technology as being a means of doing things faster and cheaper. Every CEO would like to make things faster and cheaper. So from that standpoint, I think there’s a buy into the concept of using blockchain. We are big players in the space. We created Quorum… We’ve also run the Interbank Information Network, which is a means for banks to connect to each other over the blockchain to share background data.”