Key takeaways:
- America’s largest banks are collaborating to compete with Apple and PayPal by offering a digital wallet linked to customers’ debit and credit cards.
- The new digital wallet is expected to go live in the second half of the year.
According to reports, the top banks in America are introducing a digital wallet to compete with Apple and PayPal.
Several banking behemoths have enlisted the aid of money transfer service cells to establish a digital wallet as economic institutions and organisations throughout the world search for creative approaches to enhance their operations, such as through blockchain and cryptocurrency.
One of the titans of the cryptocurrency sector also disclosed plans to work with Apple to process payments.
According to the Wall Street Journal, Wells Fargo, JPMorgan Chase, and Bank of America are among the seven lenders supporting the wallet, which will be operated by Early Warning Services, the bank-owned enterprise that created the P2P payments service Zelle.
The digital wallet will be run by Early Warning Services LLC, which also runs the Zelle money transfer service. According to EWS, the name of the digital wallet has not yet been decided.
The second half of the year is when the new digital wallet is most likely to start providing its services.
Consumers will be able to make online purchases using a wallet connected to their Visa or Mastercard debit or credit cards thanks to a product that banks are creating.
As the tech firm currently offers a branded credit card and is investigating other products for their renown client loyalty, the decision could be interpreted as an attempt to impede Apple’s drive into financial services.
The big banks have “probably always had PayPal envy,” Bernstein analyst Harshita Rawat said, in a note addressed to clients on Monday. However, it will take time for the new wallet to pose a significant threat to established players, she added.
Given the expansion of the tech company, it makes perfect sense for banks to feel competitive against PayPal.
As part of its cryptocurrency push, PayPal was considering developing its own stablecoin, which was confirmed after proof of the plan was discovered in its iPhone app.
Coming back to the future wallet, in contrast to previous services, the digital wallet will not need users to submit their card details. This is supposed to lower the risk of fraud and payment rejections, which banks anticipate will cost businesses money, reputation, and repeat business.
When the wallet debuts, the banks intend to make 150 million debit and credit cards functional within it, as reported by the WSJ.
After giving their email and phone number, customers who have wrapped up on payments and recently used a card online will be able to sign up.
