While PayPal and Apple Pay dominate the dematerialized payment solutions sector, the most important banks in the United States are organizing themselves to develop their own digital wallet. Bank of America, JPMorgan Chase and Wells Fargo are trying to maintain their influence on their customers to prevent them from switching to competitors.
A bank-initiated digital wallet
In the United States, the country’s largest banks are coming together to develop a new service that will allow consumers to pay merchants online using a digital wallet. Bank of America, JPMorgan Chase and Wells Fargo are joined by four other financial firms in rolling out this future product.
The service will be managed by Early Warning Services LLC, a company owned by numerous U.S. banks such as PNC Financial Services, U.S. Bancorp and Capital One. In addition, this product will be compatible with Visa and Mastercard payment companies: consumers will be able to store their credit card information in this dematerialized wallet to make their daily purchases.
By its positioning, this service competes head-on with similar pre-existing services on the market such as PayPal and Apple Pay. Since these two intermediaries reduce the banks’ control over consumers and their funds, financial institutions have no choice but to develop a digital payment service in their turn.
A wallet to stay competitive
The financial industry is remarkably vast. If banks once had a monopoly, those days are now over.
In the digital age, PayPal and Apple Pay remain the most widely used wallets. In the United States, the country’s largest banks have decided to crack down.
Bank of America, JP Morgan Chase and Wells Fargo are therefore looking to compete directly with the two giants, according to a report in the Wall Street Journal.
The goal will be to offer a digital wallet to pay merchants, exactly the same way as with Apple Pay and Paypal.
The decision is joint. The new service could be managed by Early Warning Services LLC. The product will also be compatible with Visa and Mastercard, the two flagship products of the banking industry.
The new wallet made in the USA will meet head-on with the most popular dematerialized payment services.
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A mixed future deployment?
The road ahead may be winding for such a product to make its mark on the digital wallet market: while PayPal dominates in the field of dematerialized financial transfers, Apple Pay continues to increase its market share thanks to its partnership with the company Stripe and its recent collaboration with the investment bank Goldman Sachs last December.
At the launch of their product, the various banks expect 150 million credit and debit cards to link to the wallet. To access the service, future users will have to meet several requirements to be eligible for the service such as:
- Provide an email address and phone number;
- have already used their card for online purchases;
- be up to date with their payments.
While its deployment is scheduled for the second half of 2023, it remains to be seen whether online merchants will accept to use this new payment solution for their sales. This is the problem the Bitcoin network (BTC) is facing today: without the involvement of various businesses, the popularization of a new payment service will always have a limited impact.