We no longer support this browser. Using a supported browser will provide a better experience.

Please update your browser.

Close browser message

As a global leader, we deliver strategic advice and solutions, including capital raising, risk management, and trade finance services to corporations, institutions and governments.

Learn more about our solutions:

  

Serving the world's largest corporate clients and institutional investors, we support the entire investment cycle with market-leading research, analytics, execution and investor services.

Learn more about our solutions:

  

We are a leader in investment management, dedicating to creating a strategic advantage for institutions by connecting clients with J.P. Morgan investment professionals globally.

Learn more about our solutions:

    

Our financial advisors create solutions addressing strategic investment approaches, professional portfolio management and a broad range of wealth management services.

Learn more about our solutions:

    

Leverages cutting-edge technologies and innovative tools to bring clients industry-leading analysis and investment advice.

Learn more:

    

The latest news and announcements.

Learn more:

    

For company information and brand assets for editorial use.

Learn more:

    

The latest news and announcements.

Learn more:

    

In a fast-moving and increasingly complex global economy, our success depends on how faithfully we adhere to our core principles: delivering exceptional client service; acting with integrity and responsibility; and supporting the growth of our employees.

Learn more:

    

J.P. Morgan is a global leader in financial services, offering solutions to the world's most important corporations, governments and institutions in more than 100 countries. As announced in early 2018, JPMorgan Chase will deploy $1.75 billion in philanthropic capital around the world by 2023. We also lead volunteer service activities for employees in local communities by utilizing our many resources, including those that stem from access to capital, economies of scale, global reach and expertise.

Learn more:

    

With over 50,000 technologists across 21 Global Technology Centers, globally, we design, build and deploy technology that enable solutions that are transforming the financial services industry and beyond.

Learn more:

    

Technology Banner

For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:

      

For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:

      

Digital Innovation

Notional pooling helps PayPal minimize disruption

The global technology and digital payments company incorporated newly acquired Zettle into a multi-entity notional pooling solution — helping to seamlessly integrate the new business and minimize disruption to day-to-day liquidity.



About

PayPal is a leading technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide.

In May 2018, PayPal announced that it had agreed to acquire Zettle, the leading small business commerce platform in Europe and Latin America, for $2.2 billion USD.1

View Transcript (updates content above) Show Audio Description (updates content above)

The challenge

As PayPal’s house bank, J.P. Morgan was asked to help with the integration of newly acquired company, Zettle within the wider PayPal group treasury structure.

The most important objectives were to:

  • Transfer control of cash balances to PayPal
  • Ease any funding requirements
  • Seamlessly integrate within the PayPal liquidity structure, both today and with the future Luxembourg location in mind
  • Reduce dependencies Zettle had on other third parties in order to ensure the timely delivery of funds for customer payouts
  • Minimize short-term disruption to underlying Zettle operations

 

The solution

PayPal joined forces with J.P. Morgan to migrate the notional pooling solution, which was implemented in two phases:

In Phase 1, the existing header account and multi-currency notional pool for PayPal remained in London, while a new Luxembourg-based multi-entity, multi-currency notional pool was established to incorporate the newly acquired Zettle entities, as well as the PayPal treasury center. This structure facilitated the centralization of funds and automated funding as required, without the need for direct intercompany lending relationships between the entities.

To minimize disruption of underlying payment activity, PayPal, Zettle and J.P. Morgan worked to put in place multibank sweeps with Zettle’s existing banks. These sweeps allow the fully automated consolidation of funds and funding of operating accounts as required.

A cross-border automated “drain” sweep to extract the net balance across both London and Luxembourg pools was implemented to seamlessly concentrate cash held within the two pools across the different locations into a single bank account, giving PayPal’s Treasury a single consolidated liquidity position for ease of deployment.

In Phase 2, the two notional pooling structures were seamlessly combined as the London structure migrated to Luxembourg, integrating the existing London-based accounts into the new multi-entity notional pooling structure in Luxembourg.

The transition was simple, thanks to the pre-existing Luxembourg liquidity structure, which had been fully tested and used by a subset of entities for a number of months.

This project was executed at speed, with strong partnership between PayPal’s Treasury team and J.P. Morgan throughout. We moved from initial scoping to notional pooling go-live in just four months, enabled by a “best in class” service from
J.P. Morgan.

Sharyn Tan, Head of Treasury M&A, PayPal

The results

The migration was successfully enacted, prioritizing speed and efficiency for the accounts and resulted in:

  • Full concentration of liquidity across PayPal and Zettle in a single currency position for efficient onward deployment.
  • Reduced idle cash/liquidity buffers on Zettle accounts, pooling 99% of all cash across participating Zettle entities.
  • An efficient and fully automated funding mechanism for the newly acquired business leveraging PayPal balances as required.
Integrating a newly acquired business into an existing Treasury structure is never easy. Nevertheless, the teams at PayPal and Zettle turned a challenging scenario into an opportunity to create an optimized liquidity framework to support their long-term strategy.

Gaetan Okias, Head of Netherlands Payments, J.P. Morgan

  • Removed operational burden:
    • Reduced risk and saved time associated with the manual activities of booking, settling, accounting and reporting of intercompany loans.
    • Eliminated the need to set up independent investment infrastructure at entity level.
    • Reduced the operational dependencies Zettle had on third parties in order to ensure the timely delivery of funds for customer payouts.
  • Ready access to group liquidity, thus eliminating the need for expensive entity level overdraft facilities.
  • Significant reduction in costs associated with FX trading, as the pool matches funds at entity level, removing the need for constant spot trading and creates natural offsets at the local balance sheet level.

 

 


 

Contact your J.P. Morgan representative to learn more about how we can support your business.

 


 

1. https://www.businesswire.com/news/home/20180920005368/en/PayPal-Completes-Acquisition-of-iZettle

 

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of J.P. Morgan, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed to be reliable. Neither the author nor J.P. Morgan makes any representations or warranties as to the information’s accuracy or completeness. The information contained herein has been provided solely for informational purposes and does not constitute an offer, solicitation, advice or recommendation, to make any investment decisions or purchase any financial instruments, and may not be construed as such.

The products and services described in this document are offered by J.P. Morgan or its affiliates subject to applicable laws and regulations and service terms. Not all products and services are available in all locations. Eligibility for particular products and services will be determined by J.P. Morgan or its affiliates.

JPMorgan Chase Bank, N.A. Member FDIC.

JPMorgan Chase Bank, N.A., organized under the laws of U.S.A. with limited liability.

© 2021 JPMorgan Chase & Co. All Rights Reserved.

Cross-border Digital Innovation Liquidity Management