Seven major banks – including Wells Fargo, JP Morgan Chase, and Bank of America – are working with money-transfer service Zelle to create a digital wallet system to compete with Apple Wallet and PayPal.
According to the Wall Street Journal, the banks are planning a new system for using online shopping using a digital wallet that is linked to their credit and debit cards. The group is expecting to begin rolling the new system out in the second half of 2023.
The new digital wallet is to be run by Early Warning Services (EWS), which is a firm owned by banks that currently operates the Zelle service. EWS says the as-yet-unnamed new digital wallet will be separate from Zelle.
Sources say that the new wallet will also compete with PayPal.
One goal of the new service is to compete with third-party wallet operators such as PayPal Holdings Inc. and Apple Inc.’s Apple Pay, according to people familiar with the matter. Banks are worried about losing control of their customer relationships. Apple, in particular, poses a big threat. The tech giant has moved further into financial services and is working on a savings account with Goldman Sachs Group Inc. and a buy now, pay later offering.
It’s also a move to cut down on fraud.
EWS’s owner banks are also trying to cut down on fraud. Customers using their wallet wouldn’t have to type in their card numbers, which can raise the risk of fraud and rejected payments that result in lost sales.
EWS plans to initially launch the service supporting Visa and Mastercard, for a total of around 150 million customers.