The banks’ new wallet may soon challenge PayPal and Apple Pay.
This revealed The Wall Street Journal, according to which a group of US banks led by Wells Fargo are planning to create a new wallet for digital payments. In addition to Wells Fargo, Bank of America (BoA), JPMorgan Chase and four other banks have reportedly also participated in this project.
The new wallet allows shoppers to pay online with an account linked to their debit and credit cards, in other words, just like Apple Pay, although it may be mainly about PayPal.
PayPal‘s is a real wallet that allows people to receive, store and send fiat currencies digitally. Over time, additional features have also been added, including linking to bank accounts and credit and debit cards to allow withdrawals from these sources, and later cryptocurrency trading.
As its share price performance clearly shows, it was a huge success in 2020 due to the restriction caused by the increase in online fees.
In fact, PayPal is by far one of the most popular online payment methods in the West due to the high level of security it offers.
PayPal on the stock exchange
Before the pandemic, PayPal’s stock price had been as low as $120 on the stock exchange, but in February 2021 it had already exceeded the value of $300, which means a 150 percent increase in one year.
Starting in July 2021, it began a long decline that not only wiped out all the gains of 2021, but even at the end of December 2022 brought the stock below $70.
This means that the crash of 2021 and 2022 was not just a reversal of the rise after the bubble of 2021, there is definitely more to it.
A comparison with the Nasdaq 100 index shows that PayPal’s shares were weighed down by no less than two major problems.
After peaking in February 2021, PayPal stock lost 28% of its value in about two weeks. It did not return to the $300 level until July, but only for three days. This sharp fall in late February occurred while the Nasdaq bull run was still underway, as was the subsequent decline in September.
Thus, the bubble burst in PayPal’s stock occurred while the Nasdaq 100 was still rising. This bubble was likely caused by the close itself and its burst was likely caused by the closing or easing of the closes.
When the Nasdaq bubble also burst in January 2022, the crash added to PayPal stock’s already four-month slump, essentially extending it by another year.
In other words, the speculative bubble in PayPal’s stock price already ended in July 2021, while the Nasdaq bubble continued until December. Beginning in January 2022, the bursting of a speculative bubble in PayPal stock was exacerbated by the bursting of a speculative bubble in the financial markets, causing PayPal’s bear market to last a full fifteen months.
The future of PayPal
Adding these purely economic dynamics is also economic.
Before the rise in online payments due to lockdowns, PayPal had no major competitors as it offered a unique service in its own way with very few much smaller emulators.
But it was the boom of 2020 that expanded PayPal’s market to such an extent that its competitors also grew quite a bit, both in number and volume.
So it’s not at all surprising that even the banking sector has decided to get into this business, which is not online payments dominated by credit and debit cards, but wallets that also allow people to store funds and perhaps use them or make a profit from them. somehow.
At this point, it can be expected that PayPal itself will respond by offering new services again and again, taking advantage of its already very large user base.
The Wells Fargo Wallet Project
According to information revealed by the Wall Street Journal, the bank wallet that Wells Fargo is working on with its partners will be managed by Early Warning Services (EWS), a company owned by the bank that already manages Zelle’s money transfer. service. However, the new wallet works separately from this service.
EWS also includes Capital One Financial ( COF ) PNC Financial Services ( PNC ), US Bancorp ( USB ) and Truist Financial Corp. ( TFC ).
The clear goal of the new bank wallet is to compete with operators like PayPal and Apple Pay, as banks fear losing control of their customer relationships.
Another goal is to reduce fraud, as this type of wallet enables card payments without a card number.
It is assumed that 150 million debit and credit cards will eventually be linked to customer accounts in the new bank wallet in the US alone.
The fact that PayPal has also decided to come crypto sector straight for over two years reveals that this is one of the areas it is exploring to expand its offerings.
As online payment services now all look the same, wallets like PayPal are competing for additional services.
These services will certainly include crypto trading, but in the future there may also be decentralized financial applications (dApps).
There are huge obstacles in offering investment services to those operating with traditional fiat currencies. In decentralized finance, anyone can do it effectively.
With so many crypto services today that allow people to invest their money in exchange for annuities or interest, companies like PayPal have to ask themselves if it’s worth staying out of this world and letting decentralized competitors offer services they struggle to offer. .
However, fully regulated companies like PayPal can also have big problems offering DeFi services directly, but no one is stopping them from partnering with crypto services.
In fact, in December of last year, PayPal partnership was announced with MetaMask, one of the leading crypto wallets developed by the well-known company Consensys. It certainly seems that the future of this market also depends on the development of the crypto sector and the interactions between the crypto and traditional banking worlds.
It should not be forgotten that one of PayPal’s main direct competitors, Stripe, has also been integrating crypto services for some time, and in partnership with Twitter.