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America’s largest banks to launch digital wallet to rival PayPal and Apple Pay

America's largest banks to launch digital wallet to rival PayPal and Apple Pay

Several banking behemoths have enlisted the aid of money-transfer service Zelle to launch a digital wallet as financial institutions and organisations around the world look for creative ways to improve their operations, such as through blockchain and cryptocurrencies. 

Indeed, according to a January 23 article in The Wall Street Journal, JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), Capital One Financial (NYSE: COF), U.S. Bancorp (NYSE: USB), PNC Financial Services Group (NYSE: PNC), and Truist Financial (NYSE: TFC) intend to launch the wallet in the second half of 2023. 

The wallet, which will operate independently of Zelle and be run by Zelle’s operator, the joint bank-owned venture Early Warning Services (EWS), aims to compete with well-known services like PayPal (NASDAQ: PYPL), Apple Pay, and Google Pay.

Digital wallet’s selling point

Notably, unlike other services, the future digital wallet won’t require users to input their card numbers. As anticipated by the banks, this will allegedly lower the risk of fraud and payment rejections, which can cost businesses money, reputation, and repeat customers. Users will only need to enter their email address during checkout, at which point the seller will ping EWS, which will then connect with banks to determine which of the user’s cards can be used with the wallet. The user can then make their choice or cancel the order. 

The wallet will also support 150 million debit and credit cards, with a focus on American customers who have made consistent payments, recently used their card online, and have provided a phone number and email address. 

While talks with other card networks, such as Discover Financial Services (NYSE: DFS), are still ongoing, the digital wallet will initially only work with Visa (NYSE: V) and Mastercard (NYSE: MA) credit and debit cards. 

It’s interesting to note that Apple (NASDAQ: AAPL), which has previously moved more aggressively into the financial services industry, is collaborating with Goldman Sachs (NYSE: GS) on a savings account and a “buy now, pay later” product.

Effect on the price of PayPal

The data retrieved by Finbold on January 23 shows that after the WSJ report was published, PayPal’s shares briefly fell by 2.76%, from $78.97 to $76.79, but have since recovered and are currently trading at a price of $78.90.

Earlier in 2022, the aforementioned banks were considering a plan to permit the use of Zelle for online purchases instead of Visa and Mastercard due to worries about fraud and how disputed transactions would be handled. At the time, the money-transfer service was experiencing a boom as ATMs and cash were being replaced by digital money transfers during the pandemic.

 

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