America’s biggest banks are teaming up to take on Apple Pay and PayPal with a new digital wallet. Analysts thought it might fail

Ever since PayPal, Apple Pay, and Cash App have attracted hundreds of millions of users to their digital wallets, the big banks are looking for ways to pull them back to the services they control.

The latest example is the push of seven banks, including Bank of America and JP Morgan Chase, to create their own wallet to compete with the payment goliaths, according to The Wall Street Journal.

The Early Warning Services consortium of banks, which manages the money transfer service Zelle, announced on Tuesday that it will operate on an as-yet-unnamed wallet. The plan is to provide “debit or credit card customers with a quick and secure way to pay while shopping online,” a spokesperson for Early Warning Services said in a statement to luck.

A clear goal of the new wallet is to make inroads against the likes of PayPal and Apple Pay, according to Journal. Analysts who closely track payment services companies are skeptical, however, that the bank’s future wallet will take a significant bite out of the companies’ market share.

“TBD If It Works”

“It’s TBD whether it works or not,” Sanjay Sakhrani, a PayPal analyst at Keefe, Bruyette & Woods, said. luck.

Harshita Rawat, an analyst at AllianceBernstein who specializes in fintech companies, is equally skeptical. “Success is not guaranteed,” he said in an interview with luck. “It’s very difficult to get traction with online payments.”

And according to Trevor Williams, a fintech analyst at Jefferies, the wallet is unlikely to pose any competitive threat to PayPal or other established online payment services. “Banks are going to have a hard time getting any kind of broad consumer adoption of any wallet they’ve created,” he said.

The reason for doubt is a history of repeated attempts by the big banks, but in the end, failed to challenge the dominance of the likes of Apple when it comes to online payments.

In 2016, JP Morgan Chase launched its own digital wallet, “Chase Pay.” However, less than five years ago it cuts the service. And, in 2020, Visa has scrapped its online checkout service to join Discover, MasterCardand American Express on collectively launch a one-click checkout button to fight PayPal.

However, compared to fintech analysts who are less rosy assessments of the new wallet of banks, Gerard Cassidy, a big bank analyst at RBC Capital Markets, is more optimistic.

“Banks are fast followers when it comes to some of these technologies,” he said luck. “And because of their established position in the financial system, they seem to gain momentum once they are committed to the product.”

Wallet Wars

The competitive landscape of digital wallets is already wide, which is why fintech analysts remain unconvinced by the banks’ latest attempts to gain market share.

on the last annual filing with the SECPayPal said it has 426 million active accounts. And investment analysts it is estimated that there will be approximately 507 million Apple Pay users by 2020. Add to Cash App, Google Pay, and a new wallet from Robinhood, and the competition for users is already at a fever pitch.

Perhaps that is the reason why companies like PayPal and Robinhood are trying to attract new customers through new crypto offers. PayPal has launched several initiatives to allow users to buy crypto, including its recent integration with MetaMask’s Web3 wallet. and Robinhood has launched a digital wallet for cryptocurrencies last year.

Early Warning Services, the company that will operate the banks’ new wallet, did not comment on whether the wallet will have any crypto functionality. And any possibility of this happening is a question many years down the line.

“Crypto is kryptonite for banks,” said Cassidy, the RBC analyst. “And until the regulators roll up their sleeves to make sure we don’t have more significant problems with cryptocurrencies, I’d say it’s not something to focus on.”

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