In order to compete with Apple Pay and PayPal, several banks are apparently developing a digital wallet that connects to debit and credit cards.
According to The Wall Street Journal, the digital wallet would be handled by Early Warning Services, a joint venture between numerous banks that already operates Zelle. According to the study, the main banks implicated include Wells Fargo, JPMorgan Chase, and Bank of America.
According to the article, the new wallet will be released with Visa and Mastercard already on board.
The action might be interpreted as an attempt to halt Apple’s drive into consumer banking, despite the fact that the tech company already provides a branded credit card and is investigating additional products for its notoriously dedicated user base.
PayPal, whose major business is digital payments, rose 0.5% on Monday after plunging more than 2% earlier in the day.
In a note to clients on Monday, Bernstein analyst Harshita Rawat stated that the major banks have “likely always had PayPal envy,” but that it would take time for the new wallet to pose a real threat to incumbents.
“It just takes a very long time, a fantastic user experience (which must be better than incumbents, not just comparable), and a compelling merchant value proposition to establish the two-sided network effects in payments to attain scale,” Rawat wrote in the letter.
The revelation comes after a mixed earnings season for large banks, with some CEOs, including Bank of America’s Brian Moynihan, predicting a mild recession in the United States. Bank equities have suffered in recent months, despite rising interest rates, as concerns about a recession and a sluggish investment banking environment have outweighed advances in net interest income.