In an effort to compete with Apple Pay and PayPal, several banks are reported to be developing a digital wallet that integrates debit and credit cards. According to The Wall Street Journal, the digital wallet will be operated by Early Warning Services, a joint venture between several banks that also operates Zelle. According to the report, Wells Fargo, JPMorgan Chase, and Bank of America are among the major banks involved. The new wallet would initially be launched with Visa and Mastercard already on board. The company has confirmed to CNBC that it intends to launch a wallet product in the near future.
The move could be seen as an effort to slow Apples’s push into consumer banking, as the tech giant already offers a branded credit card and is exploring other products for their famously loyal customer base. Shares of PayPal, which has digital payments as its core business, ticked up 0.5% on Monday after initially falling more than 2%. Bernstein analyst Harshita Rawat said in a note to clients on Monday that the major banks have “likely always had PayPal envy” but that it would take time for the new wallet to be a serious risk to incumbents. “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 in the note. There has been a mixed earnings season for big banks, with several CEOs, including Bank of America’s Brian Moynihan, predicting a mild recession in the United States. While interest rates have risen over the past year, bank stocks have struggled as fears of a recession and a slowing investment banking environment have partially offset gains in net interest income.