Transferring cash is about to get a lot easier for millions of Americans. It has just been announced that clearXchange, a new transfer tool, will be partnering with Bank of America® (NYSE: BAC), Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC).
Traditional transfers require a routing number so the Federal Reserve can code, bundle and attach paper checks back to the original account. Many consumers avoiding the hassle of writing checks, have turned to prepaid debit cards, PayPal and other such service-decreasing fees. Bank of America®, Chase and Wells Fargo have combined forces to attempt an increase in revenues through providing the clearXchange service to customers.
ClearXchange brings the ultimate convenience to customers at the above listed banks, and they would not have to enter new information or even sign up for the service.
According to Bank of America® spokesperson, Don Vecchiarello, clearXchange is currently being piloted in Arizona by Bank of America® and Wells Fargo, with plans to release the service state by state within the upcoming year. “The overall strategy is constantly trying to innovate services so we can upkeep relationships and simplify the customer experience,” said Vecchiarello over the phone.
Banks Need to Step it Up: Mobile Threats
It’s no wonder big banks are ‘upping their mobile game’ as more and more outside companies try to enter the mobile payment industry.
Google has just announced a partnership with Sprint to bring the first, real mobile wallet. By allowing customers to customers to simply use their phones to pay through Google, a bulky wallet will no longer be needed: a plus for consumers, and Google as well.
Google isn’t the only company posing a threat to bank payment revenues, Square recently partnered with Visa to allow merchants and customers to pay through mobile phones and iPads replacing credit cards. This service allows customers to start up a virtual tab that gets paid off after they check into the store of the merchant they are shopping with.
With all these threats to banking services, it is no wonder big banks are partnering up to fight back.
Banking is Back, PayPal May Be Out
Although many will be celebrating the convenience of this new service, there is one group that will not be happy: PayPal. Currently, PayPal is at 100 million active users with around $992.3 million in revenue in just one quarter.
Up until now, PayPal has been able to avoid major threats to their service such as the Federal Reserves debit fee cap affecting large banks. After the new debit card fee caps were put in place, banks lost out on nearly 80 percent of revenue received from merchants. With the launch of clearXchange, big banks are hoping to find a way to increase revenue without harming customer relations.
According to a statement in the Associated Press from Jack Stephenson, director of Mobile, eCommerce and Payments at JPMorgan Chase, “Customers will be able to send and receive money even more quickly and easily — with full confidence their funds are in a bank account without worrying about cash, checks or higher-cost services.”