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New Digital Wallet: Banks Compete with Apple and PayPal

January 24, 2023

Banks Team Up with Zelle to Create Digital Wallet to Compete with Apple Pay and PayPal

Over the last 24 hours, news has broken that major banks are teaming up with Zelle to create a digital wallet to compete with Apple's Apple Pay and PayPal, with plans to roll out this new offering in the second half of 2023. It is reported that this digital wallet will be linked to the user's debit or credit cards.

The banks working on this new product include Wells Fargo, Bank of America, JP Morgan Chase, and four other rumored banks. The other four banks joining this venture are rumored to include Capital One, PNC, U.S. Bank, and Truist.

As reported by the Wall Street Journal, the new digital wallet will be run by Early Warning Services (EWS), which is owned by banks and is currently operating Zelle, but they have yet to reveal the name of the soon-to-be new wallet.

Banks are taking an interest in digital wallets for a few reasons, but the main one seems to be that they want to keep bank customer relationships from moving to big tech companies, such as Apple. Banks are particularly worried about Apple's plans to expand further into financial services, as the tech giant is currently working on a savings account option with Goldman Sachs and planning on offering customers a buy now, pay later option of their own.

They also aim to repair the fraud issues that Zelle has been notoriously prone to, resulting in previous efforts to merge Zelle into online purchases being canceled over endless fraud and disputed transactions.

It has yet to be reported how this digital wallet will work, as the ins and outs are still being worked on, but they have made their intention to release the product in the second half of 2023 well-known.

The Wall Street Journal reports that the consumer will likely input their email address into a merchant's checkout page, and from there, the merchant will contact EWS. Then, EWS confirms payment information with the banks, and if all goes well, the customer's card information will be provided to the merchants.

Upon this new digital wallet's debut, banks plan to enable 150 million Visa and Mastercard debit and credit cards to be used within the new system. They are deciding who can be first to use the digital wallet based on consumers who are up-to-date on payments, use their cards regularly for online purchases, and have provided eligible email addresses and phone numbers.

Consumers have already begun expressing their concerns about the upcoming release of this digital wallet. They are concerned that sharing their personal contact information with every merchant they purchase from using the wallet will create many spam calls, texts, and emails, among other issues.

EWS is attempting to onboard other card networks, such as Discover, to see if they would be interested in allowing their cards to be used in the new digital wallet.


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