The largest banks in the United States announced plans on Tuesday (24) for an electronic wallet, targeting services provided by Apple Pay and PayPal.
Banks are working with Early Warning Services (EWS), the company that runs the Zelle electronic payment service.
At the moment, Zelle mainly allows transfers of funds between people who know each other.
The digital wallet is an attempt to regain control from banks over purchases currently made using Apple Pay and similar services. The new digital wallet is expected to launch at an unspecified time later this year.
The seven banks that own EWS are among the nation’s largest: JPMorgan Chase, Bank of America, Wells Fargo, Capital One, PNC, US Bancorp, and Truist.
EWS has yet to release 2022 results, but in 2021 it said customers sent $490 billion in payments via Zelle in 2021, up 59% year-over-year.
While that’s more than double the $230 billion in payments and transfers handled by Venmo that year, it’s about half the volume handled by PayPal.
PayPal Holdings, which includes PayPal and Venmo, had a total payment volume of $1.25 trillion in 2021.
Apple is also getting more involved in financial services, announcing a pay later service last year and a partnership with Goldman Sachs on an Apple credit card in 2019.
But Zelle has come under fire from Congress for issues with fraud and incorrect payments. Senator Elizabeth Warren announced the results of an investigation in October that said despite a lack of data from most banks, fraud claims were at a pace of $255 million last year, up from $90 million in 2020. .
And Warren’s investigation alleged that banks were not getting customers back after complaints of fraudulent transactions, with just under half of “unauthorized” transactions classified by the EWS as fraud returned to consumers in 2021 and the first half of 2022.
“Zelle is increasingly becoming a tool for bad actors who use the platform to defraud consumers, while the big banks that own Zelle do little to stop them or provide resources to their consumers,” Warren wrote to the EWS and the banks in October.
The EWS responded that the rate of fraudulent transactions has been going down, not up, and that over 99.9% of transactions go smoothly. While he responded to Warren that he was changing his customer liability and refund policies, Warren responded in December that he had little faith in the changes.
“Your proposed policy changes are long overdue: consumers deserve better than the current EWS approach, which leaves them hanging while scammers and fraudsters benefit,” Warren wrote in a letter to companies in December.
“But given the consistent reluctance of the EWS and the major banks that own and operate the platform to cooperate or provide lawmakers and the public with full and factual information about Zelle fraud, your announcement gives me little confidence that your company will implement the scope complete set of changes needed to protect consumers from fraud in Zelle.”
Source: CNN Brasil
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