JPMorgan Chase is increasing its attractiveness to small business customers by preparing to provide digital payroll processing.
According to Gusto CEO Josh Reeves, the bank has chosen San Francisco-based fintech company Gusto to supply the feature’s underlying technology.
If you use Chase Payment Solutions, you may access payroll from the same location where you conduct banking, according to Reeves. The same login and credentialing process is used; everything is made simpler in a one-stop shop environment.
In recent years, JPMorgan, the largest bank in the United States by assets, has invested billions of dollars in technology. It’s part of a bigger struggle for American retail and business consumers’ allegiance as fintech competitors like PayPal and Square develop into all-inclusive suppliers that pose a threat to established banks. While PayPal’s venture arm has invested in payroll service providers, Square offers payroll services.
JPMorgan has already released fintech tools, such as an early direct deposit function for customers and a credit card reader for small businesses that is similar to Square’s.
- To ensure that employees are paid accurately and on time. This is essential for maintaining employee morale and productivity.
- To comply with tax laws and other regulations. Small businesses are subject to the same payroll laws as large businesses, and failure to comply can lead to fines and penalties.
- To track employee hours and wages. This information is needed for accurate payroll processing, as well as for budgeting and financial planning purposes.
- To generate reports for financial planning and analysis. Payroll reports can provide valuable insights into labor costs and other financial trends.
- To protect the business from legal disputes. A well-documented payroll process can help to defend the business against claims of wage and hour violations.
Here are some additional benefits of having a payroll process in place for small businesses:
- Reduces the risk of errors. A payroll process can help to minimize the risk of making mistakes in payroll calculations, which can lead to overpayments or underpayments to employees.
- Saves time and money. Automating payroll tasks can free up time for small business owners to focus on other important aspects of their business. Outsourcing payroll to a professional service can also save money on payroll-related costs.
- Improves employee satisfaction. Employees appreciate being paid accurately and on time. A well-managed payroll process can help to boost employee morale and productivity.
JPMorgan chose to collaborate with Gusto rather than develop its own solution for payroll services, a necessity for small business owners, some of whom still pay employees with paper checks.
According to Reeves, this is because different states, cities, and counties have unique characteristics that make it challenging to break into the market.
An individual with knowledge of the issue said that Gusto will assist JPMorgan in shortening the time it takes to launch this service, which will start operating by the end of 2024. The service will pay salaries to employees, produce tax forms and pay stubs, and submit paperwork to regional and federal officials.
JPMorgan’s launch of a new payment app to tackle its old rival PayPal is a significant event in the financial sector. It is a sign that even the largest banks are recognizing the need to innovate and adapt to the changing landscape of payments.
The new app is likely to have a number of effects on the financial sector. First, it will increase competition in the payments market, which could benefit consumers and merchants by lowering fees and improving services. Second, it could accelerate the shift towards digital payments, as more and more consumers adopt mobile payment solutions. Third, it could lead to more collaboration between banks and fintech companies, as banks look to leverage the expertise of smaller, more agile players.