NEW YORK–Seven big banks are backing an effort to design and launch a new digital wallet linked to their debit and credit cards that will allow shoppers to pay at merchants’ online checkouts, according to a new report.
The digital wallet will be managed by Early Warning Services LLC, the bank-owned company that operates money-transfer service Zelle. The wallet, which doesn’t have a name yet, will operate separately from Zelle, EWS said, according to the Wall Street Journal.
The banks involved are all owners in EWS and include Bank of America, Wells Fargo, JPMorgan Chase, Capital One Financial Corp., PNC Financial Services Group Inc., U.S. Bancorp and Truist Financial Corp.
Plans are to begin rolling out the new offering in the second half of the year, the Journal reported.
“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,” the Journal stated. “Banks are worried about losing control of their customer relationships. Apple, in particular, poses a big threat.”
The Journal added that 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, the report explained.
150-Million Cards
“The banks expect to enable 150 million debit and credit cards for use within the wallet when it rolls out,” the Journal said. “U.S. consumers who are up-to-date on payments, have used their card online in recent years and have provided an email address and phone number will be eligible.
“The banks are still ironing out the details of the customer experience. It likely will involve consumers’ typing their email on a merchant’s checkout page,” the Journal report continued. “The merchant would ping EWS, which would use its back-end connections to banks to identify which of the consumer’s cards can be loaded onto the wallet. Consumers would then choose which card to use or could opt out.”
Rolling Out With Cards
The report added that the wallet is being designed to roll out with cards since that is how U.S. consumers are used to shopping. The banks figured it would increase the odds that more people would use the wallet.
Should a sizable number of merchants enable the wallet and consumers adopt it, EWS banks could explore adding other payment options, EWS said. That could include enabling payments directly from bank accounts, according to the Journal.