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Third-party money (3PM)

The shift to an increasingly online, digital economy is creating new opportunities and considerations for treasury operations. One of the biggest new developments is third-party money (3PM)—managing cash that does not belong to your company.

Contact us

| 2:56

Third-party money or 3PM

Episode 6: See how one global business began managing third-party money effectively to support their online marketplace and grow their business.

| 2:56

Third-party money or 3PM

Episode 6: See how one global business began managing third-party money effectively to support their online marketplace and grow their business.

Third-party money, or 3PM-- it's a part of treasury with immense opportunity. That's why we gathered these three JP Morgan leaders to explain it in under three minutes. Ready? So, just as a refresher, why are businesses looking for new ways to manage third-party money?

There are so many reasons. Third-party money, or 3PM, is when a company holds cash that doesn't belong to them.

Cash that belongs to others, like customers, sellers, or merchants.

Handling third-party money is very different, in that it needs to be segregated and accounted for differently.

It never touches your income statement, but when managed effectively, can drive tremendous benefits for your business.

Hmm, can you give me an example?

For sure. Let's imagine a company that facilitates services for everyday household tasks, such as moving, delivery, and handyperson work.

And how is 3PM useful to them?

Well, they want to match customers with the service providers easily.

So they launch an online marketplace to go direct to consumers, grow, and become digitally relevant.

That means?

It means they can match freelancers with demand, allowing consumers to find help with day-to-day tasks.

And what exactly do they need to make this happen?

First, they need to facilitate the flow of funds between the buyers and the sellers on their online platform.

Secondly, they need a seamless payment experience for these parties to make their company stand out.

And, third, they need to optimize and manage the third-party cash effectively, while applying the right treatment, segregation, and reporting.

So how can JP Morgan help?

We collaborate closely with the online marketplace to create a tailor-made payments experience.

A specialized account structure combined with seamless payments, payouts, and a thoughtful liquidity solution will create a differentiated value proposition for them.

And the outcome?

The outcome is outstanding. Now they can focus on building out their marketplace, safe in the knowledge that we're taking care of the end-to-end funds flow.

From collection, through multiple payment methods, to safeguarding the funds, and then disbursing them to the merchants.

Wow. So what if I want to talk to somewhere about my 3PM strategy?

Reach out. 3PM is inherent to your digital journey. And for decades we have helped clients around the world hold and transact third-party cash.

JP Morgan is the partner to help you every step of the way.

And that's--

Third-party money--

In under three minutes--

With three JP Morgan leaders.

[MUSIC PLAYING] 

3PM is different from traditional working capital—whether through day-to-day working capital or investable proceeds and retained earnings.

Corporate cash
Corporate cash belongs to the company and appears on its balance sheet.

Third-party money (3PM)
3PM is cash held on behalf of someone else, and needs to be classified as such and accounted for separately.

| 3:26

Third-party money or 3PM

Episode 5: Get a quick look at how to set your business up for continued success by taking the right first steps with 3PM.

| 3:26

Third-party money or 3PM

Episode 5: Get a quick look at how to set your business up for continued success by taking the right first steps with 3PM.

Third-Party Money, or 3PM-- it's a part of treasury with
immense opportunity. That's why we gathered these three JP Morgan leaders to
explain it in under three minutes. Ready? So, just as a refresher, if a company
has third-party money to contend with, what's the first step?

Third-party money needs to be segregated and accounted for
differently. You need to navigate regulation, which can vary around the world.

The first step is to establish the most suitable account
structure for your precise needs.

And that benefits a business how?

Well, it all starts with an account, does it not? The right
account structure is what truly sets your business up for success.

It goes beyond the transaction to identify new revenue
streams and connect commercial considerations to your treasury ecosystem.

All of which lead to efficient operating models and higher
returns.

Sounds good. But there's no one-size-fits-all, right?

Spot on, which is exactly why you need a well-defined
business model underpinned by a customized account structure.

We work with you every step of the way to design and
establish an effective framework.

Whether by country, currency, business line, or even by
product.

So you can curate an exclusive unique digital experience for
your clients.

Ah, so JP Morgan provides the technology and--

The technology and much more than that.

Our market leading embedded finance products, plus an
established account structuring practice empower your digital transformation.

But let's remember no single 3PM solution or even account
type fits all. But we got you covered.

Is safeguarding at the top of your priority list? The
account types we offer from simple demand deposit accounts, to designated
client money, all the way to specialized escrow arrangements where funds are
managed for predefined agreements.

Visibility at [INAUDIBLE]? That's where virtual account
solutions come in. And they can all work together.

Well co-create the right solution for your specific needs so
that you achieve the nirvana of true visibility, control, and optimization.

So it is a continuum, meaning you can actually enable a
progressively aligned experience?

Absolutely. We offer a spectrum of account solutions that
span across our clients' needs.

Marketplaces, pay facts, seeking wholesale rails, or in
e-aspiring companies looking for payments as a service.

The bottom line?

When you're ready to take that first step to define your 3PM
strategy, choose an experienced, highly innovative provider of scale, with a
proven track record, like JP Morgan.

So what if I want to talk to somewhere about my 3PM
strategy?

Give us a call. We've been a leader in 3PM for decades,
making us a trusted partner for clients across all industries worldwide.

And that's--

Third-party money--

In under three minutes--

With three JP Morgan leaders.

[MUSIC PLAYING] 

| 3:18

Third-party money or 3PM

Episode 4: Find out why today’s businesses need to embrace third-party money—and how it can give you a strong competitive advantage.

| 3:18

Third-party money or 3PM

Episode 4: Find out why today’s businesses need to embrace third-party money—and how it can give you a strong competitive advantage.

Third-party money, or 3PM. It's a part of treasury with immense opportunity. That's why we gathered these three JPMorgan leaders to explain it in under three minutes. Ready? So, remind me, why do businesses need to manage third-party money?

Great question. Firstly, when you embrace third-party money, you massively firepower your e-commerce ambitions.

Secondly, a solid 3PM strategy magnifies your user experience to expand your client base and solidifies your existing relationships.

Finally, you propel your business forward, across global markets, currencies, and time zones.

But don't most organizations already have a 3PM strategy?

Actually, no. Many companies have yet to adopt a proactive 3PM strategy. They rely on passive methods or simply haven't addressed it at all.

Why not?

Because establishing a successful 3PM framework is specialized work. Many companies just do not know where to start, or they are simply not aware of the tremendous opportunities this presents.

Not having the right partnerships to help them navigate the regulatory landscape and liquidity nuances also totally possible.

So having no 3PM strategy is a competitive disadvantage?

Absolutely. Customers and suppliers demand an exceptional user experience. In direct to consumer models, multi-party commerce, or even embedded finance, a proven 3PM framework delivers an enhanced digital ecosystem backed by frictionless funding.

When it comes to 3PM, you snooze, you lose. 3PM presents companies with massive growth potential to stay competitive. After all, 3PM is good for business.

Aha. Can you give me an example?

Sure. Picture this, you are an online marketplace that connects buyers and sellers globally. Your customers have access to a wide range of options and they don't have to worry about currencies, market differences, or even knowing the sellers.

And?

And with value adds such as digital wallets, subscription schemes, or loyalty programs, they never leave.

If they haven't already, is it too late for a business to get started?

Not at all. You may be an old pro at this or a growing company. Either way, the time for action is now.

So you're saying that 3PM is an integral part to ensure success today and tomorrow?

You got it. A successful 3PM strategy means more customers, distributors, and suppliers. You save costs and free up your time and resources to do more. And who doesn't like that?

Right. Who can help strategize innovative 3PM solutions?

JPMorgan, of course. We have decades of experience, industry-leading capabilities, and trusted expertise so you can unleash unlimited opportunities for your business.

And that's--

Third-party money--

In under three minutes--

With three JPMorgan leaders.

[MUSIC PLAYING]

 

Key considerations for treasurers

Corporate treasurers have to think about a number of areas when tasked with managing a flow of funds destined for different receivers, including:

  • true

    Setting up more accounts to take care of divergent fund flows

  • true

    Paying out cash to multiple external businesses

  • true

    Aligning with different licensing or regulatory models

  • true

    Maintaining the separation of fund types without sacrificing visibility and efficiency

| 3:20

Third-party money or 3PM

Episode 3: So third-party money is when a company handles money that isn't its own. But what are some of the geographic implications of 3PM?

| 3:20

Third-party money or 3PM

Episode 3: So third-party money is when a company handles money that isn't its own. But what are some of the geographic implications of 3PM?

[MUSIC PLAYING]

Third-party money, or 3PM-- it's a part of treasury with immense opportunity. That's why we gathered these three JPMorgan leaders to explain it in under three minutes. Ready?

So third-party money is when a company handles money that isn't its own. But what are some of the geographic implications of 3PM?

So many. That's because most businesses using 3PM are operating across different countries.

And it's working across different markets that adds complexity.

Exactly. It increases the legal risk and regulatory considerations.

Especially when you compare it to handling your own working capital. It's night and day.

Because it's third-party money, not your own.

So things like licensing requirements and safeguarding-- all of that becomes much more important.

You know what I'm going to ask.

For example, say a marketplace operating in one country decides to expand its reach-- new country, new requirements. Remember 3PM is someone else's cash.

As a result, each country is going to have rules around how you can transact with 3PM. Some may involve licensing, others may controls how you market to your customer, but all are important to enabling your business to expand its reach.

So take safeguarding, there are geographic considerations there?

Yes. Just like the overall 3PM landscape, safeguarding rules differ by country.

How so?

Well, some countries require that 3PM is segregated in accounts, others specify the currency in which it needs to be held. Segregation can also be a contractual relationship between the company and their customers, even when it is not a regulatory requirement.

The goals are the same-- visibility, control, and optimization-- but the solutions to achieve may vary.

That's a lot to consider and that's just one 3PM implication.

True, but that's also why we're here.

The three of you or all of JPMorgan?

Well, us, but also all of JPMorgan.

We know how challenging growing your business globally can seem, so we work hand in hand with clients to find the right solution for their needs.

In the short-term and the long-term.

And you've got the experience?

We do. We've worked with 3PM worldwide and understand the journey across countries. Whenever we expand our 3PM solutions into new geographies, we work diligently to fully understand the landscape. And we ensure our products are built for today and fit for tomorrow.

And clients are generally happy taking on a 3PM strategy?

Very much so. 3PM is inherent to your digital journey.

Got it. So 3PM almost always operates across different jurisdictions, but JPMorgan is there to help clients every step of the way.

Exactly, you got it.

And that's--

Third-party money--

In under three minutes--

With three JPMorgan leaders.

[MUSIC PLAYING] 

Major opportunities for third-party money (3PM)

As 3PM becomes more important, the role of corporate treasury will continue to evolve, shifting the primary focus from areas like multicurrency management and risk management to encompassing settlement optimization, frictionless payments and complex new account structures. Opportunities include:

  • Treasury optimization
  • Payments as a service
  • Loyalty and rewards
  • Data collection and insights

 

| 3:30

Third-party money or 3PM

Episode 2: Digital transformation and e-commerce are growth opportunities for all businesses these days, and 3PM is just one part of this broader shift.

| 3:30

Third-party money or 3PM

Episode 2: Digital transformation and e-commerce are growth opportunities for all businesses these days, and 3PM is just one part of this broader shift.

Third-party money or 3PM. It's a part of treasury with immense opportunity. That's why we gathered these three J.P. Morgan leaders to explain it in under three minutes. Ready? So just a refresher on third-party money. It's when a company handles money that isn't its own, but which industry is 3PM impacting the most?

Nearly every industry. Digital transformation and e-commerce are growth opportunities for all businesses these days, and 3PM is just one part of this broader shift.

A shift. Why don't you set the stage?

So for the last two decades, companies started as digital first dominated e-commerce.

Then the pandemic hit and businesses had to pivot.

And the result has been

In one word, massive. We've seen a network effect where customers, suppliers, and providers are more digital forward, and increasing demand for services like instant payments and digital wallets.

But this hasn't really affected brick and mortar?

No, it has.

In fact, some of the most interesting opportunities for 3PM have been disrupting the traditional brick and mortar.

Go on.

For example, think of a consumer packaged goods business. Customer returns are complicated and leave both parties unhappy. The merchant didn't sell its goods and it takes a lot of time for the customer to get back their money.

Enter the digital wallet. Instead of processing a traditional return, you can apply the refunded amount immediately and keep your customer in your ecosystem. Complement the digital wallet with a 10% off coupon and chances are your customer will buy again.

Oh, very cool. But how exactly is that 3PM?

Because the cash never leaves the company.

Right because they're storing it in a digital wallet.

Exactly. It may need to be accounted for differently, but it's still with you.

This is a big change. So I'm guessing there must be some real benefits to 3PM.

There are. Think about it with a good 3PM strategy, you enable your business to grow. E-commerce allows you to grow your business better, faster, cheaper, and reach new customers globally with enhanced data.

So huge growth potential?

You got it. It's a ripple effect. Business leaders know where the cash is and where it's going, which helps improve liquidity management.

OK, but you three are from J. P. Morgan?

We are.

So where do you come into play?

There's a lot to consider for any company when creating a 3PM strategy. We've been a leader in 3PM for decades making us a trusted partner for clients across all industries worldwide.

So basically, 3PM is part of a broader e-commerce story that presents massive business and growth opportunities.

And

And because of its 3 PM leadership worldwide J. P. Morgan is the partner to help companies of any size in any industry.

Exactly.

And that's

Third-party money

In under 3 minutes

With three J. P. Morgan leaders.

[MUSIC PLAYING]

Payments

The next frontier: Notional pooling for third-party money

Oct 03, 2023

With the power of today’s digital technology, many businesses are embracing third-party money (3PM) commerce opportunities. The question is: Can they also reap the benefits of managing 3PM through advanced liquidity techniques such as notional pooling?

Read more

| 2:38

Third-party money or 3PM

Episode 1: Third-party money or 3PM, it's a part of Treasury with immense opportunity. That's why we gathered these three J.P. Morgan leaders to explain it in under three minutes.

| 2:38

Third-party money or 3PM

Episode 1: Third-party money or 3PM, it's a part of Treasury with immense opportunity. That's why we gathered these three J.P. Morgan leaders to explain it in under three minutes.

Third-party money or 3PM, it's a part of Treasury with immense opportunity. That's why we gathered these three JPMorgan leaders to explain it in under three minutes. Ready? So tell us, what is third-party money?

I'm so glad you asked. Third-party money, or 3PM, is when companies process payments or hold cash that doesn't belong to them, but to a third party, like customers, sellers, or other partners.

So imagine a ride hailing app. They hold cash to pay out their drivers, right? But if they evolve to offer more services like food delivery, 3PM comes into play as the company connects the customer and the restaurants without becoming owner of the product itself, or as we know, marketplaces.

But if they're already holding cash for drivers, why do they need to think about 3PM?

Because handling a third-party cash like restaurants is very different than managing your own. For one, it needs to be segregated and accounted for differently. It never touches their income statement.

And companies want to get involved in 3PM because?

It's good for business. Think new revenue streams, differentiated value proposition, more market information, all of which lead to higher returns.

In other words?

In other words, the power to grow and become more relevant to your customer in a digital way.

And if I'm a treasurer, what does 3PM mean for me exactly?

Well, it means the most for you.

Can you--

Be more specific? 3PM often means licensing, specialized liquidity treatment, and enhanced payments, which can vary around the world.

That sounds like a lot of work.

No, no, that's why we're here.

And by we, you mean?

JP Morgan. For decades, we've helped clients around the world hold and transact third-party cash. We go beyond the transaction to help you identify new revenue streams and connect commercial considerations to your Treasury ecosystem. So you can navigate this changing environment and achieve your e-commerce dreams.

Wow, so basically, companies are handling more and more money that isn't their own. And JPMorgan is the partner to help them navigate this new terrain.

Exactly, you got it.

And that's--

Third-party money--

In under three minutes--

With three JP Morgan leaders.

[MUSIC PLAYING] 

Let's talk about solutions for your business


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