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7 Banks Team Up to Create Digital Wallet, Challenging PayPal and Apple Pay

7 major banks are teaming up to create a digital wallet that would compete with PayPal.

JPMorgan Chase, Bank of America, Wells Fargo and the four other banks behind the money transfer network Zelle are developing a digital wallet to challenge the dominance of PayPal and Apple Pay. The news was first reported by the Wall Street Journal and later confirmed by the company in a blog post.

The banks expect to enable 150 million debit and credit cards for use within the wallet when it rolls out in the second half of this year. The digital wallet will be managed by Early Warning Services (EWS), the company that operates Zelle, but will operate separately from Zelle. The other four owners in the EWS/Zelle venture include Capital One Financial, PNC Financial Services Group, U.S. Bancorp and Truist Financial. EWS’ owners debated a plan to allow shoppers to use Zelle directly for online purchases last year, but decided not to move forward, WSJ previously reported.  

The new, as-yet-unnamed digital wallet will be launched with Visa and Mastercard debit and credit cards, with plans to add other card networks in the future. EWS also said that if a sizable number of merchants enable the wallet it might also explore adding other payment options, such as direct payments from bank accounts. James Anderson, who previously led the development of Mastercard Digital Enablement Service, has joined EWS to lead the wallet initiative as Managing Director.

“We hear from consumers that they want to utilize online payments from their trusted financial institutions,” said Anderson in a statement. “EWS is working closely with financial institutions to build a wallet that provides consumers a secure and easy way to pay. The wallet will also aim to deliver better business outcomes for merchants — including higher transaction approval rates and more completed sales.”

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With streamlined checkout (no more remembering that 16-digit card code) and enhanced security features, digital wallets are becoming increasingly popular. By 2025, digital wallets are expected to account for 52.5% of all transaction value, according to Worldpay by FIS.

PayPal still dominates the space, accounting for approximately 16% of all U.S. purchases, but Apple Pay is quickly gaining ground, accounting for about 6% of purchases in the U.S., according to Salesforce spending data. Challengers like Google Pay and Samsung Pay also are gaining ground.

PayPal is working hard to maintain its dominance in the space, with actions like the acquisition of Venmo and the debut of a rewards program. The company certainly has a head start — it’s been around since 1998, when it debuted as an alternative payment option for purchases on eBay.

“If you look at where we’re making investments, we’re trying to round out the whole commerce experience,” Thomas Lai, Head of North America Sales at PayPal told Retail TouchPoints in a 2022 interview. “A lot of the alternative wallets will help you at the moment of payment and maybe one step on either side of that. What we’re envisioning is giving people the opportunity to use us all the way through the commerce experience.”

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