By Iain Withers
LONDON (Reuters) - JPMorgan (NYSE:JPM) has struck a deal to buy a majority stake in German car giant Volkswagen (DE:VOWG_p)'s payments business ahead of a planned rollout of in-car technology that allows drivers to automatically pay for fuel or tolls.
The U.S. bank has agreed to buy close to 75% of Volkswagen Payments S.A. for an undisclosed sum, subject to regulatory approvals.
The Luxembourg-based business was founded in 2017 and operates across 32 countries. It offers car purchase and leasing, in-vehicle payments, fuelling and electric vehicle charging and subscription services such as insurance and in-vehicle entertainment.
JPMorgan said it plans to invest in and rebrand the payments business and expand its mobility-focused payments to other industries.
"One of the fastest-growing platforms is the connected car marketplace, whereby the car acts like a wallet for purchasing goods, services or subscriptions," Shahrokh Moinian, EMEA head of wholesale payments at JPMorgan, told Reuters.
Non-finance companies, including car manufacturers, have stepped up expansion into financial services in recent years.
Volkswagen's financial services division will retain a 25.1% stake in the payments business, JPMorgan said. The deal is expected to close in the first half of 2022.
Volkswagen Group did not provide a breakdown of earnings for the payments business in its half-year results in July, but said sales at its financial services arm were 22.6 billion euros ($26.77 billion), up 18% on the prior year.
($1 = 0.8444 euros)