JPMorgan-Plaid Data Fee Deal Shifts Open Banking Battlefield

A deal between JPMorgan Chase & Co. and Plaid Inc. on data access fees is reshaping the closely watched fight between banks and financial technology companies over who pays for open banking in the US.

The agreement, announced this week, will see one of the country’s largest data aggregators pay an undisclosed amount to link fintechs and other third-party companies to customer accounts at the nation’s largest bank.

The fact that the biggest market players struck an accord will make other banks and data aggregators more willing to go along with payments for data access, said Justin Schardin, a vice president for financial services at CFRA Washington Analysis.

The deal comes as the Consumer Financial Protection Bureau weighs whether to allow banks to charge for linking customer data to third-party companies in a rewrite of a Biden-era rule that barred such fees.

If banks are already charging by the time a new open banking rule is finished, it’ll be hard for the agency to block fees a second time, Schardin said.

“It feels like a ceasefire with the outcome leaning in one direction,” he said.

‘Biggest Player’ Caves

The Biden administration’s October 2024 open banking rule, mandated by Section 1033 of the Dodd-Frank Act, required banks to let customers easily share their deposit and credit card accounts with third-party companies. That included a ban on charging fees for such access.

Banks sued to block the rule hours after its release, with the inability to charge for access among their complaints.

Data aggregators such as Plaid and MX Technologies Inc. should be required to pay for access because the rule ordered banks to establish APIs and other technical upgrades to make linking accounts easier and safer, the bank plaintiffs argued.

The Trump administration at first asked a federal judge in Kentucky to vacate what it called an “unlawful” rule.

That opened the door for JPMorgan in July to start charging data aggregators for access to customer accounts.

Crypto and fintech companies, including advocates close to the White House, complained about the fees, saying they were steep enough to drive some third parties out of business. The CFPB then asked for a pause in the open banking litigation so it could rewrite the rule.

The Financial Technology Association, a fintech trade group that counts Plaid as a member and is defending the Biden-era CFPB rule in court, said the deal between JPMorgan and Plaid “underscores the anti-competitive ability of the nation’s largest banks to set a new market floor during a period of regulatory uncertainty.”

“It demonstrates the urgent need for action to protect the right of consumers to securely permission and share their financial data without costly fees,” Penny Lee, the FTA’s president and CEO, said in a Sept. 16 statement.

Fintechs and data aggregators almost universally opposed JPMorgan’s fees and were united in refusing to negotiate with the bank.

Plaid’s deal is likely to change that calculus, said Dan Quan, a former CFPB official and now general partner of venture capital firm NevCaut Ventures.

“I don’t see how there’s any pushback,” he said. “The biggest player has already caved.”

Industry Reaction

Whether the deal between JPMorgan and Plaid settles the industrywide dispute will depend on how other aggregators, fintechs, and banks react, said Ron Shevlin, the chief research officer at Cornerstone Advisors, a bank consulting firm.

“The ‘fight’ won’t be over until we see what the other aggregators do and what decisions Plaid makes about passing on the costs,” Shevlin said.

Plaid has said it has no plans to pass JPMorgan’s fees on to customers, which are predominantly traditional financial companies and fintechs.

The Financial Data and Technology Association of North America was set to file a lawsuit challenging JPMorgan’s proposed fees before Plaid’s deal with the bank, according to people familiar with the matter who asked for anonymity to discuss legal matters.

Plaid is an FDATA-North America member.

It’s not clear whether the lawsuit will move forward. Representatives for FDATA-North America declined to comment on any litigation.

It also remains to be seen how many other banks are preparing their own pricing terms to present to aggregators, although there’s a widespread belief that JPMorgan’s success opens the door.

Deals between data aggregators and banks could raise prices for consumers, as aggregators pass on costs and shut off potential cost-saving innovations, said Lacey Aaker, a former CFPB staffer and now a fintech policy analyst at Consumer Reports.

“What we’re sensitive to is when we have really big players in this market setting initial terms for this access, it does give them a structural advantage,” she said.

CFPB Redo

The CFPB’s bid to rewrite the Biden-era rule is another wild card, said Laura Huntley, a managing director at FTI Consulting Inc. who focuses on fintech and financial services.

Once banks and fintechs have agreed to fee structures, it’ll be difficult for the CFPB to step in and stop those payments altogether, she said.

The CFPB would then have to decide whether it wants to limit fees to a reasonable reimbursement for costs associated with customer data sharing—something the Trump administration is unlikely to do, she said.

If the CFPB allows banks to charge too much for accessing data, smaller companies and the innovations they bring may be shut out, Huntley said.

“You really are raising a barrier to entry to smaller fintechs,” she said.