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Are major US banks working together on a digital wallet against PayPal and others

Reports say that major banks in the US are quietly working together to launch an e-wallet. This digital wallet will look to replace the large share of financial transactions which are held by third-party wallet operators such as PayPal, Google Pay (GPay), Apple Pay, WhatsApp and others. Large banks in the nation including JPMorgan, Wells Fargo and the Bank of America and other banks are said to be working on this new product and would release the wallet before the end of the year.

On Monday, the Wall Street Journal reported that the new digital wallet that is being developed by the banks will be launched in the second quarter of the year. The report comes after major banks have released their fourth quarter results.

Major banks in the nation believe that the e-wallet would decrease fraud. The wallet will be linked to the customer’s debit and credit cards. It will get support from fintech Early Warning Services, a joint venture of several banks. The fintech powers Zelle, a popular payment app. The new wallet is expected to be launched with Visa and Mastercard as they are on board with the new product.

Wolfe Research analyst Darrin Pellet discussed the report on CNBC’s Tech Check. The analyst said that third-part wallets were easy to use as they worked well and the companies behind them such as PayPal and others had heavily invested in developing such e-wallets.

Pellet also said that it was hard to imagine that banks were willing to spend enormous amounts of resources including time and money to develop digital wallets; to dislodge third party wallets.

Banks have been looking at the huge popularity of third-party payment services for a long time. Launching a similar product is well within reach but it will take time for the banks to build customer support as services such as PayPal and others have huge, loyal customer bases.

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