The news: JPMorgan Chase and Plaid have renewed their data access agreement, resolving a dispute that arose when the bank started charging fintechs for access to customer data, per PYMNTS.
The new deal includes a pricing structure but reportedly won't result in new fees for Plaid customers.
Why it matters: JPMorgan said it would start charging fintechs to access customer information, citing that API calls were taxing its systems. And according to the original fee schedule JPMorgan circulated, Plaid could have ended up paying $300 million per year in fees to work with JPMorgan, per CNBC. However, it’s unlikely this is what Plaid has agreed to pay.
The resolution between the two industry giants sets a precedent for how future data-sharing agreements might be structured, as banks like JPMorgan seek compensation for the infrastructure and security costs associated with open banking.
Industry reactions: The Financial Technology Association (FTA) sees this agreement as a sign that large banks are using their market power to set high fees for access to consumer data. In a statement, they called the move “anti-competitive” and harmful to the market and consumers.
Our take: It’s noteworthy that JPMorgan and Plaid reached an agreement while the Consumer Financial Protection Bureau (CFPB) is still collecting public comments on a new iteration of its open banking rule. The agreement may influence the rule’s final outcome and encourage other financial institutions (FIs) who are considering similar moves.
But agreements may look different depending on the weight carried by FIs. For example, losing access to JPMorgan's estimated 82 million customers would be a financial blow that fintechs like Plaid cannot afford. But smaller FIs may not command the same level of threat.
Smaller FIs will likely have to continue offering free or low-cost data access to remain attractive partners. This could create a clear incentive for fintechs to work with smaller FIs, as it may be a more cost-effective and collaborative relationship.