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The largest US banks intend to create a competitor to PayPal and Apple Pay to win back the online payment market.
A number of financial institutions, including Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co., are developing a new solution that will allow you to pay for online purchases using a wallet linked to debit and credit accounts of customers.
The operation of the digital wallet will be managed by Early Warning Services LLC (EWS), owned by seven of the largest US banks, including Capital One Financial Corp., PNC Financial Services Group Inc., U.S. Bancorp and Truist Financial Corp., and money transfer service provider Zelle. According to EWS, the new wallet will operate separately from Zelle. It is expected to launch in the second half of this year.
The new service faces the challenge of competing with third-party wallet operators such as PayPal and Apple, whose expansion into financial services is jeopardizing banks' control over customer relationships. Apple, in particular, has made significant progress in this direction, planning in cooperation with Goldman Sachs Group to open high-yielding savings accounts for Apple Card holders and launch “buy now, pay later” installments.
The new proposal will also help in the fight against fraud. When using their wallet, customers will not need to enter their card numbers, risking fraud and payment rejection, which in turn will lead to a drop in sales.
It is assumed that about 150 million debit and credit cards will be linked to the new service. US consumers who have used a bank card to pay for online purchases in recent years and provided an email address as well as a phone number will also be able to access a digital wallet.
EWS owners last year discussed the possibility of using the Zelle service to pay for online purchases. However, due to the risk of fraud and some legal obstacles, it was decided to abandon this idea.