Wells Fargo and other major banks challenge digital wallets like Apple Pay and PayPal in team-up with Zelle
The biggest banks, spotting a threat in the tech sector years after it became established, want to compete with Apple Pay, Samsung Pay and others
➡️ The Shortcut Skinny: Digital money
🤺 Wells Fargo and others team up w/Zelle to fend off tech companies
🍎 Apple’s been quietly building a consumer-friendly banking empire
💵 New Apple high-yield savings could beat anything offered by Wells Fargo
📉 American confidence in banks is lower than ever, making success
Nearly a decade after the announcement of Apple Pay – Apple’s built-in digital wallet that enables iPhone users to pay for goods in a secure way both online and in person, without a physical card – the biggest banks in the world have decided they need to be in the digital wallet game, according to a report at The Wall Street Journal.
Apple Pay, PayPal, Google Pay and Samsung Pay have all gained popularity as alternative forms of payment in recent years. Not only that, but more and more people are routing their money around their bank accounts using these and other smartphone-based payment systems, like Venmo.
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The Apple threat
In particular, the banks are concerned with moves by Apple, which continue to become more bank-like. In 2019, a partnership with Goldman-Sachs yielded the Apple Card, a credit card with seemingly lenient creditworthiness requirements and the goal of being a simplistic, transparent take on credit that purported to do away with predatory practices carried out by other institutions.
Then late last year, the company announced its intention to introduce a high-yield savings account, completely manageable on iPhone, for Apple Card users. Apple didn’t say when the savings account would debut, though rumors as recently as December suggest it will be soon – given the imminent launch of iOS 16.3, which we spotted in the announcement for the Apple Watch Black Unity Sport Loop announcement, it could even be tomorrow, though it hasn’t been spotted in the iOS 16.3 beta.
Wells Fargo, Bank of America and others have reason to be concerned. Last year, Goldman-Sachs hit JD Power & Associates’ top spot for customer satisfaction among mid-size card issuers for the second year, and Apple’s forthcoming savings account is purported to have no fees in addition to competitive interest rates. While the company didn’t specify what the annual percentage yield would be, Goldman-Sachs’ consumer-facing brand, Marcus, currently stands at 3.30% APY with no fees or minimum balance.
We don’t know whether Apple would offer the same, of course, but Wells Fargo, widely (and, I would say, correctly) considered the worst bank in America, offers a paltry 0.15% APY on its entry-level savings accounts, and up to 2% APY on its so-called Platinum Savings plan – if you have at least a $1 million balance.
Apple also started experimenting last year with iOS 16 beta 4 Apple Pay features that would allow folks to use Apple Pay for web purchases in browsers other than Safari – at least on the iPhone, making it even easier for people to use the service.
News flash: people hate banks
American confidence in banks took a nosedive leading up to the housing market crash of the late aughts, and it never really recovered, with a July 2022 Gallup poll result reporting just 27% of consumers saying they had “a great deal” or “quite a lot” of confidence in the institutions – the lowest number going back to at least 1979.
The combination of an improved customer experience and historically negative perceptions of the largest consumer banks means massive challenges ahead for those companies, and I would be greatly surprised if they can make a compelling smartphone experience, much less convince customers to use it.