Dive Brief:
- The nation’s largest banks plan to launch a digital wallet that consumers can use to shop online, The Wall Street Journal reported Monday.
- The digital wallet will link to consumers’ debit and credit cards and will be managed by Early Warning Services, which is owned by a consortium of seven banks: JPMorgan Chase, Bank of America, Wells Fargo, U.S. Bank, PNC, Truist and Capital One.
- The yet-to-be-named wallet, which is expected to launch in the second half of the year, will operate separately from the EWS-run peer-to-peer payments platform Zelle, the Journal reported.
Dive Insight:
The banks are launching the offering to compete with third-party wallet operators such as PayPal and Apple, sources told the Journal.
Tech giant Apple’s steady growth into the financial services arena includes plans for a new high-yield savings account with Goldman Sachs, as well as a buy-now-pay-later offering — moves banks may view as a threat to their relationships with consumers.
The digital wallet is designed to roll out with cards, and Visa and Mastercard are already onboard, EWS told The Wall Street Journal.
EWS also reached out to other card networks, including Discover, to gauge interest in allowing their cards to be linked to the digital wallet, EWS said.
Depending on merchant and consumer adoption rates, the consortium of banks could explore adding other payment options, including enabling payments directly from bank accounts, EWS told the Journal.
EWS did not respond to Banking Dive’s request for comment.
In a research note to clients Monday, Bernstein analyst Harshita Rawat said it would take time for the new wallet to be a serious competitor to existing payments players.
“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,” Rawat said, according to CNBC.
Plans for a digital wallet follow last year’s Wall Street Journal report that EWS was considering allowing shoppers to use Zelle for online purchases.
That plan reportedly was scrapped after lawmakers raised concerns over the network’s handling of disputed transactions.
