Wells Fargo, JPMorgan, Bank of America and several other large US banks are set to launch a mobile wallet later this year that links to debit and credit cards.

Early Warning Services (EWS) will operate the wallet, which will be initially compatible with Visa and Mastercard-branded cards. EWS, whose owners also include Capital One, PNC Financial Services , U.S. Bancorp and Truist Financial  plan to begin rolling out the new offering in H2 2023.

To use the wallet, customers will most likely have to provide their email addresses on merchants’ online checkout pages. EWS will then comb through its bank connections to identify which cards customers can pay with.

The banks expect to enable 150 million debit and credit cards for use within the wallet when it rolls out. US consumers who are up-to-date on payments, have used their card online in recent years and have provided an email address and phone number will be eligible.

Why hit the wallet market now? 

The banks have two primary objectives:

Tighten customer relationships. The mobile wallet will compete with third-party wallets like Apple Pay and PayPal, these wallets are gaining checkout power—and banks fear that this may wear away at their customer relationships by decreasing card visibility.

Almost half of US digital buyers used PayPal to make a digital purchase last month, according to Bizrate Insights. Introducing a bank-branded wallet might help card issuers curb third-party wallet dominance.

Decrease online fraud. Card-not-present (CNP) fraud has steadily increased, and banks hope that letting customers check out without inputting card details will help minimize fraud.

CNP fraud losses grew 11.3% year over year (YoY) in 2022, totalling $8.75 billion. Losses are expected to grow 8.5% and reach nearly $9.49 billion this year.

The wallet could help reduce issuers’ fraud liability, which could grow alongside e-commerce’s rise.

And while it wasn’t one of the banks’ explicitly stated goals, the digital wallet could also give banks the added benefit of gaining a larger slice of e-commerce spending, which is expected to hit $1.163 trillion in the US this year.

Merchant and customer uptake isn’t certain

Merchants already have a rich selection of checkout solutions to choose from.

Banks will need to emphasise their wallet’s benefits—primarily minimising fraud—to achieve meaningful merchant adoption.

Early Warning Services told the WSJ that merchant uptake could determine whether it expands the initiative to include other payment options, like bank transfers—which we expect will become more popular this year.

Aside from standard debit and credit card checkout, consumers already have access to offerings like one-click checkout; buy now, pay later (BNPL); and network-branded payment offerings.

It might be hard for the forthcoming wallet to stand out from the noise. And some consumers may resist signing up for another checkout option.

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