Brendan McDermid | Reuters
Several banks are reportedly working on a digital wallet linked to debit and credit cards in an attempt to compete with Apple Pay and PayPal.
According to The Wall Street Journal, the digital wallet will be managed by Early Warning Services, a multi-bank joint venture that also operates Zelle. Among the major participating banks Wells Fargo, JPMorgan Chase and Bank of Americathe report says.
The new wallet will initially launch with Visa and Mastercard already on board, according to the report.
This move can be seen as an attempt to slow down an applepush into consumer banking as the tech giant already offers a branded credit card and explores other products for its famously loyal customer base.
Shares of PayPal, whose core business is digital payments, fell more than 2% after the report.
Bernstein analyst Harshita Rawat said in a note to clients on Monday that the big banks have “probably always been the envy of PayPal,” but it will take time for the new wallet to become a serious risk to incumbent banks.
“Building two-way network effects in payments requires a very long time to scale, an extraordinary customer experience (which needs to be better than incumbents, not just similar) and a compelling merchant value proposition,” Rawat said. in the note.
The report comes on the heels of a mixed earnings season for major banks, with several CEOs, including Bank of America’s Brian Moynihan, warning that the U.S. is likely in for a mild recession. Bank stocks have struggled over the past year, even as interest rates have risen, as worries about a recession and a slowing investment banking environment offset rising net interest income.
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— CNBC’s Michael Bloom contributed to this report.