Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. plan to debut a person-to-person payments service on Wednesday that lets customers send money to each other with an email address or mobile phone number, the Wall Street Journal reported Tuesday.
The service, which will be offered through a joint venture called clearXchange, will pull funds from a customer's online checking account and send it to another person's account, according to the Journal.
The banks are offering the service as a test for free, though they could decide to charge customers for it later on. Other banks could join the service as well, the Journal reported.
Several P-to-P payments services, including eBay Inc.'s PayPal, Fiserv Inc.'s ZashPay and CashEdge Inc.'s Popmoney, already allow consumers and businesses to send money to each other via email address or mobile phone number. PayPal, traditionally viewed as a competitor to banks, requires consumers to set up a separate account and register a bank account with it to use it, while ZashPay and Popmoney are mainly offered through banks' websites.
Credit card network Visa Inc. earlier this year also announced a service aimed at competing with PayPal that lets customers send money from one Visa card to another through banks that issue the network's cards.
Banks "are essentially trying to regain the ground that they've lost ... and time that they've lost and wasted over the past 10 years by not really competing with PayPal," Gwenn Bezard, a research director with Aite Group LLC, said in an interview with American Banker on Tuesday.
Some banks, including Wells Fargo and Citigroup Inc., had offered their own P-to-P services to compete with PayPal, though those efforts ultimately floundered, Bezard said.
"They were so focused on competing with one another that they ignored essentially the threat of PayPal," Bezard said.
However, they still have a shot to regain that ground, he added.