Seven large banks, including Bank of America, JPMorgan Chase, and Wells Fargo, have reportedly partnered to create a digital wallet that will compete with other third-party wallet providers such as Paypal and Apple Pay.
Big Banks Developing a Digital Wallet
Bank of America, JPMorgan Chase, Wells Fargo and four other financial institutions behind the Zelle payment network are working together to create a digital wallet for customers to 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 co-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 customers’ debit and bank 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 worry about losing control of their customer relationships, the post conveyed, citing people familiar with the matter.
EWS plans to start 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 including their cards to the wallet.
Bernstein analyst Harshita Rawat commented on the news in a note to clients on Monday. She outlined that the major banks have “likely always been envious of Paypal”, stating:
It just takes a lot of time, a great customer experience (which has to be better than the incumbents, not just comparable), and a compelling business value proposition to drive the two-sided network effects on payments to achieve scale.
What do you think of the collaboration of the major banks to launch a digital wallet to potentially compete with Paypal and Apple Pay? Let us know in the comments section.
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