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.
Big Banks to Launch a Digital Wallet
Bank of America, JPMorgan Chase, Wells Fargo, and four other financial institutions behind the payment network Zelle are collaborating to launch a digital wallet for consumers to use at online checkout, The Wall Street Journal reported Monday.
The wallet will be managed by fintech firm 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 U.S. Bank.
The new digital wallet, which will be linked to shoppers’ debit and credit cards for online payments, will operate separately from Zelle. The banks aim to compete with other third-party wallet providers such as Paypal and Apple Pay as they are worried about losing control of their customer relationships, the publication conveyed, citing people familiar with the matter.
EWS plans to begin rolling out the new wallet in the second half of this year. Visa and Mastercard are already on board, and the fintech firm has reached out to other card networks, such as Discover Financial Services, to assess their interest in adding their cards to the wallet.
Bernstein analyst Harshita Rawat commented on the news in a note to clients Monday. She explained that the major banks have “likely always had Paypal envy,” adding:
It simply takes a very long time, a killer customer experience (which needs to be better than incumbents, not just similar), and a compelling merchant value proposition to build the two-sided network effects in payments to achieve scale.