J.P Morgan working on TikTok's payments infrastructure

TikTok has enlisted J.P Morgan to evolve its payments infrastructure.

A case study on J.P Morgan’s website reveals the bank has been brought in to help ByteDance, TikTok's parent company, to streamline payments on TikTok.

A key part of TikTok’s business model is that its users can offer cash or buy virtual in-app coins to spend on virtual gifts for content creators and influencers.

According to analytics firm Sensor Tower, TikTok users worldwide spent $3.4 billion on TikTok in 2022, up from $2 billion the previous year, while spending in the US alone more than tripled – to $670 million – from the previous year.

Challenges for TikTok listed in J.P Morgan’s case study include limited pay out options, lack of visibility into payment status, long settlement cycles, and maintaining multiple accounts.

J.P Morgan has developed a payment solution with the “comfort and convenience of its users front and centre”, according to its case study.

The solution includes real-time payments infrastructure that can be connected to local clearing systems. This allows users, content producers, and influencers to be paid instantaneously and directly into their bank accounts at any day or time, the bank said.

TikTok’s host-to-host connectivity with banks has also been overhauled and replaced with application programming interfaces (API) connectivity that allows real-time exchange of data between ByteDance and J.P. Morgan.

J.P. Morgan has also deployed its Virtual Account Management (VAM) cash management and liquidity tool, which enables functions including segregation, automated reconciliation, and greater visibility and control over payments.

The pair-up may raise hackles over data privacy concerns. TikTok recently conceded that some of its China-based employees had access to UK and EU user data, a direct contradiction of previous statements.

Last year the UK parliament moved to close its TikTok account citing concerns that sensitive data could be shared with the Chinese government.

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