Big U.S. banks to take on tech rivals with instant payments
By David Henry
NEW YORK (Reuters) - Depositors at some of the largest U.S. banks are finally going to get the chance to do something quick and simple: send money to another person's account instantaneously by mobile phone.
The idea has been in the works for at least five years, and in the meantime, Silicon Valley has made incursions into the industry's role as a payment intermediary. But now, big banks including JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co and U.S. Bancorp are starting to plug into a system they jointly own, called clearXchange, that will allow each others' customers to transfer money in a flash when they split a dinner check, rent payment or vacation bill.
"What we are doing now is delivering payments in real time, which is what our customers have asked for," Mary Harman, managing director for payments at Bank of America, said in an interview. The bank is one of two that have started rolling out the system to customers.
While technology companies like PayPal Holdings and Facebook Inc already offer snazzy payment apps that appeal to young consumers, the banking industry has a crucial advantage because it controls how quickly money actually moves between bank accounts. Individuals transferred some $200 billion to one another using mobile phones and computers last year, according to Javelin Strategy & Research.
Bank executives and analysts who closely track payment systems say that if clearXchange is fast, functional and user-friendly, banks can make up for lost ground.
Bank of America plans to announce on Wednesday that its customers can transfer funds instantly through clearXchange with customers of U.S. Bancorp, which said last week that it was plugged into the speediest part of the network. JPMorgan Chase & Co and Capital One Financial Corp representatives told Reuters they plan to offer the service later this year.
Wells Fargo & Co said on Wednesday that it is working to roll out instant payments in the middle of this year.
Analysts expect PNC Financial Services Group Inc will also start this year. A representative declined to comment. Continued...