America’s biggest banks on Tuesday announced plans for an electronic wallet aimed at Apple Pay and PayPal.
Banks are working with Early Warning Services, the company that runs its Zelle electronic payment service. The new electronic wallet, which will operate separately from Zelle, will allow people to make purchases online. Right now, Zelle primarily allows the transfer of funds between people who know each other.
Digital wallets using Apple Pay and similar services are currently trying to regain control of banks over purchases. The new digital wallet is slated to launch later this year at an unspecified time.
EWS has not yet reported results for 2022, but in 2021 it said consumers sent $490 billion in payments through Zelle in 2021, up 59 percent from a year earlier. While that’s more than double the $230 billion in payments handled by Venmo this year, it’s half the volume handled by PayPal. PayPal Holdings
(PYPL)Including both PayPal and Venmo, the total payment volume in 2021 was $1.25 trillion.
(AAPL) Credit Cards in 2019
But Zail has been criticized by the Congress. Problems with fraud and incorrect payments. Sen. Elizabeth Warren announced the results of an investigation in October that found fraudulent claims totaled $255 million last year, up from about $90 million in 2020, despite a lack of data from most banks. .
And Warren’s investigation alleged that banks are not responding to customers after complaints of fraudulent transactions, with just under half of the transactions classified as “unauthorized” by the EWS as of 2021 and 2022. Consumer fraud returned in the first half of 2018.
“Zelle is increasingly becoming a tool for bad actors who use the platform to defraud consumers, while the major banks that own Zelle do little to stop them or support their customers,” Warren wrote to EWS and Banks in October.
EWS responded that the rate of fraudulent transactions is decreasing, not increasing, and that more than 99.9% of transactions go through without problems. While it responded to Warren that it was changing its liability policies and refunds for customers, Warren responded in December that it had little certainty about the changes.
“Your proposed policy changes are long overdue: consumers deserve better than the current approach to EWS, which leaves them holding the bag while scammers do the trick,” Warren wrote in a letter to the companies in December. And cheaters benefit.” “But given the continued willingness of EWS and the major banks that own and operate the platform to provide lawmakers and the public with full, complete and factual information about fraud on Zelle , your announcement gives me little confidence that your company will implement the full scope of changes necessary to protect consumers from fraud at Zelle.