Seven major banks, including Bank of America, JPMorgan Chase and Wells Fargo, have reportedly teamed up to launch a digital wallet that will compete with other third-party wallet providers such as Paypal and Apple Pay.
Major banks will launch a digital wallet
Bank of America, JPMorgan Chase, Wells Fargo and four other financial institutions behind the Zelle payment network are collaborating to launch a digital wallet that consumers can use when paying online, The Wall Street Journal reported Monday.
The wallet will be managed by fintech company Early Warning Services (EWS), which owns and operates Zelle. EWS provides risk management solutions to financial institutions, government entities and payment companies. It is jointly owned by Bank of America, JPMorgan Chase, Wells Fargo, Truist, Capital One, PNC Bank and US Bank.
The new digital wallet, which will be linked to shoppers’ debit and credit cards for online payments, will operate separately from Zelle. Banks are aiming to compete with other third-party wallet providers such as Paypal and Apple Pay as they fear losing control over their customer relationships, the publication said, citing people familiar with the matter.
EWS expects to begin rolling out the new wallet in the second half of this year. Visa and Mastercard are already on board, and the fintech company has reached out to other card networks, such as Discover Financial Services, to gauge their interest in adding their cards to the wallet.
Bernstein analyst Harshita Rawat commented on the news in a note to clients on Monday. She explained that the big banks have “probably always envied Paypal”, adding:
It just takes a lot of time, an amazing customer experience (which needs to be better than incumbents, not just similar) and a compelling market value proposition to create the two-way network effects in payments to achieve the scale.
What do you think of major banks collaborating to launch a digital wallet to eventually compete with Paypal and Apple Pay? Let us know in the comments section below.
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