Big Banks Join Forces to Enter Payments

Big banks develop digital wallet services that customers may use to shop online.

Wells Fargo & Co., Bank of America Corp., JPMorgan Chase, and four other banks introduce a new service that will enable consumers to pay at merchants’ online checkout with a *drumroll* digital wallet linked to their debit and credit cards.

Early Warning Services LLC (EWS) is a bank-owned firm that manages the money-transfer service, Zelle. It will manage the digital wallet. According to EWS, the wallet, which is not named yet, will operate independently from Zelle.

According to people familiar with the matter, one of the new company’s goals is to compete with third-party wallet providers such as PayPal Holdings Inc. and Apple Pay. Banks are concerned that they will lose control of their client relationships. Apple is a big concern, in particular. The company is developing a savings account with Goldman Sachs Group Inc. and a buy now, pay later service as it expands into financial services.

Some of The Hopes and Dreams of Digital Wallet

Big banks, which own EWS, are also working to prevent fraud. Customers who used their wallets wouldn’t have to enter their card details. The possibility of fraud and lost sales may be higher if this is the case.

When the digital wallet launches, the banks estimate that 150 million debit and credit cards will be ready for use. Those who have used their card online in the last two years and supplied an email address and phone number will be considered first. Americans who are current on payments will qualify.

The big banks are still ironing out the finer points of the customer experience. Consumers will likely have to input their email on a merchant’s checkout page. The merchant will send the consumer’s cards to EWS. EWS will identify which can be loaded onto the digital wallet using its back-end connections to banks. Consumers will be allowed to select from among several cards or opt-out.

The Wall Street Journal reported that EWS’s owners debated a plan last year to allow consumers to use Zelle for online transactions. The choice not to proceed was motivated by concerns about fraud and the handling of disputed transactions. This had gained lawmakers’ attention not once.