Bank of America (BAC), JP Morgan (JPM), and Wells Fargo (WFC) are working on a digital wallet that customers can use to shop online in an effort to compete with Apple Pay and PayPal (PYPL).
- Bank of America, JP Morgan, and Wells Fargo are said to be working on a digital payment wallet.
- The banks own the Zelle digital payments network and will expand its reach.
- PayPal and Apple had been working more closely and increasing their market share.
These banks will lead the projects with support from payments giants Mastercard (MA) and Visa (V), according to the Wall Street Journal. Early Warning Services LLC, a joint venture owned by the banks that manage the Zelle Payments Network, will operate the digital wallet. The plan marks the first move by banks to enter the digital wallet industry.
PayPal had more than 400 million active wallets in 2022, according to data from Statista, while year-on-year growth has slumped since the onset of the pandemic. Apple Pay has over 500 million active users despite having no support for Android mobile devices. A 2% dip in PayPal’s stock price (PYPL) followed the news, but it eventually spiked.
The news follows the recent earnings season for the big banks. The aggressive interest rate increases from the Federal Reserve have boosted earnings at the big banks, though headwinds are increasing. Higher rates are leading to larger loan loss provisions, and the Federal Reserve is pumping the brakes on rate hikes, which will dent earnings in coming quarters.