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Chase's revenue from those fees is showing signs of eroding. In the first half of 2015, fee income in the bank's credit and debit card business fell 2 percent from the same period a year earlier, even as the bank processed a higher volume of transactions. A person familiar with the matter said lower processing fees were a critical part of that decline.
JPMorgan CEO Jamie Dimon pledged in an April letter to shareholders "to be very aggressive in growing this business." At a conference with securities analysts in February, he cited the credit card operation as an example of how JPMorgan has to cut prices and upgrade products to keep from falling behind competitors.
"In a capitalist world," Dimon said, "you've got to be giving the client more, better, faster, quicker, or you lose."
Credit card fees generated about 4 percent of the bank's revenue in 2014, but analysts said that much of that money has historically fallen to the bottom line, making it a critical support for the bank's $22 billion of annual profits.
To stem the decline, Chase is assembling a vast array of parts into what will become either a brilliant machine or a makeshift disappointment. A key part of the strategy came in 2013, when Chase inked a deal with Visa that allowed the bank to essentially lease Visa's network for 10 years at what industry sources said is a fixed rate.
There are some signs that the Visa deal is starting to pay off for Chase. This year, the bank won the right to process credit card transactions for customers of Marriott International at some 3,700 hotels in the U.S. and Canada and for Chevron USA at nearly 8,000 gas stations.
Steve Mott, an independent payments consultant said, "Fizzle was the watchword until they got the Chevron deal."
Some wonder if the bank is wasting its time.
"So far, there is no evidence that it has mattered in a way that changes market share," said veteran card company analyst Craig Maurer of Autonomous Research.
BRAINCHILD
Chase's efforts are the brainchild of Gordon Smith, the head of JPMorgan's consumer business, who joined Chase in 2007 after 26 years at American Express. He is trying to recreate large parts of American Express inside of JPMorgan Chase, the largest U.S. bank by assets.
An American Express spokeswoman declined to comment.
To imitate American Express, Smith needed a few components. When a consumer pays for a sweater at a department store with a credit card, three parties usually get involved: money moves from the bank that issues the consumer's credit card through a network like Visa or MasterCard to the bank that processes transactions for the retailer. Each of those three, the two banks and the network, collects a fee for its role.
American Express usually occupies all three links of the chain. But Chase, without borrowing Visa’s network, was only able to be two of the three: the bank for retailers and the bank that issued the credit card to the consumer.
The deal that Chase signed with Visa allows the bank to essentially serve as all three links, which in the near term gives it more leeway to cut costs.