Innovation gets points, but is it too little, too late? Fintechs could soon have new competition when it comes to payments. Central U.S. banks like JP Morgan, Wells Fargo, and Bank of America, among others, are building a new digital wallet for customers.
The problem is that it sounds like what fintech companies already do.
The banks are making a digital wallet linked to a customer’s debit or credit card. These can be used for online shopping. The banks have already gotten 150 million credit and debit cards from Mastercard and Visa for the wallet’s launch. Customers won’t have to enter their card information. A feature that has become common with services like PayPal, Cash App, and Apple Pay. Instead, a simple email address and cell phone number at the cash register will do.
The initiative is led by Early Warning Services, owned by a bank. But thinks of itself as a fintech company and runs the P2P payments platform, Zelle.
Capital One, PNC Financial, U.S. Bancorp, and Truist Financial are some other banks on the list. The announcement says that Early Warning Services has chosen James Anderson, who used to work for Mastercard, to lead the project.
Even though banks get points for being creative, likely, fintechs still scare. Most of the time, big banks swing late. Consumers may look at them, but they won’t quit the financial platforms that offered them convenience and quickness they demand.
Banks get “thanks, but no thanks” because individuals tired of handing their financial information to various applications. They want the first super app in the country, which will likely go to a fintech company, not a bank. Banks don’t have much of a chance now that Elon Musk is in the running.
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By the time the new digital wallet comes out later this year. The big players in online payments will probably have changed the game again with a shiny new feature related to cryptocurrency.
The group of banks is going after digital payment leaders PayPal and Apple Pay. Whose dominance in the market has made it hard for them to do business. This is likely partly because Apple and Goldman Sachs are working together on a savings account and BNPL service.
The IRS has said what it plans to do about payments over $600 made through Venmo and Paypal. People will want to know if new digital wallet will have a target on the back like the old one.
U.S. customers with accounts that are in good standing will be able to use the Wall Street wallet.
