Frankfurt Seven major US banks want to launch their own payment app and thus put the payment services PayPal and Apple Pay in their place. Well Fargo, Bank of America, JP Morgan and four other financial institutions are already working on the new product, as reported by the Wall Street Journal (WSJ).
Consumers should store their debit and credit cards in a so-called wallet and be able to use them to pay online. It is being built by the financial start-up Early Warning Services, which is owned by the big banks and already operates the Paypal competitor in the USA. The company has not yet given a name for the planned app.
One aim of the offer is to stand up to the online payment service Paypal and Apple Pay, the payment service of the iPhone manufacturer Apple, as the WSJ writes, citing insiders. Banks worry that they could lose control of the customer relationship. They are now betting that 150 million credit and debit cards will be stored in the wallet.
>> Read more here: Mastercard and Visa instead of Maestro: The first savings banks have exchanged Girocards
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With both Apple Pay and Paypal, US customers usually also deposit their credit card, which is much more common in the USA than in Germany. The respective digitized map is inserted into smartphone apps. In addition, Apple Pay is currently working on offering other financial services and, for example, has announced a savings account together with the Goldman Sachs bank.
In addition, the owners of Early Warning Services are using the new app to push back cases of fraud. Consumers using the app do not have to type in card numbers for every transaction. Entering digits is considered a risk of fraud. However, this is not necessary with Paypal and Apple Pay.
Subordinate role for Paydirekt
However, the advance of the US banks comes late. After all, Paypal and Apple Pay have long been established. In addition, retailers would also have to accept the new payment method and integrate it into their online shops.
How difficult it can be to set up a new online payment service as a latecomer was shown by the example of Paydirekt in Germany – a few years ago. The German banks started Paydirekt in 2015 with great ambitions, but the hopes were far from fulfilled. Above all, Paydirekt should counter PayPal, which is very popular in Germany. However, it only plays a mini role in German e-commerce.
The merger of Paydirekt and Giropay, the second payment method used by German banks, two years ago did not bring a breakthrough either. Giropay was founded in 2005. The common payment method is now only called Giropay, the company behind it is still Paydirekt. The company is owned by the savings banks, the cooperative banks, Deutsche Bank and Commerzbank.
Decision on EPI awaited
Several European banks are currently considering a joint payment offer. The European Payments Initiative (EPI) is also aiming to develop a wallet that consumers could use to use various payment options. These include mobile-to-mobile payments, payments when shopping online and at the checkout.
It is obvious that existing payment cards are also deposited with EPI – in Germany above all the much-used Girocard, better known by its old name “EC card”. Initially, the idea of launching an EPI payment card of its own was considered.
Whether and how EPI will be implemented is to be decided soon. The prestige project was launched in 2020 by numerous major European banks. However, many of the original 30 EPI banks have since left.
The German cooperative banks, like Commerzbank, initially canceled their participation in EPI because they did not agree with the original orientation. However, the Volks- und Raiffeisenbanken later signaled their approval of the slimmed-down version. The savings banks and Deutsche Bank are also involved.
With EPI, the proponents aim to make the European financial industry more independent of the powerful US payment and credit card companies Mastercard and Visa as well as PayPal.
The governments and central banks in Germany and other European member states support the project because they believe it would be important for strengthening the European EU financial market.
More: Bundeskartellamt initiates proceedings against Paypal