Major US banks are taking on tech-heavy payment services companies by allowing depositors to transfer money between accounts instantanously by mobile phone.
The lenders are responding by inroads into the payment services industry by Silcon Valley companies.
The idea has been in the works for at least five years.
And now big banks such as JPMorgan Chase & Co, Bank of America Corp., Wells Fargo & Co. and US Bancorp are ready to roll out clearXchange, a platform that lets customers to transfer money in a flash, Reuters reports.
That means customers can 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.
The bank is one of two that have started rolling out the system to customers.
Technology companies such as PayPal Holdings and Facebook Inc. already offer snazzy payment apps that appeal to young consumers.
But the banking industry has a crucial advantage because it controls how quickly money actually moves between bank accounts.
Individuals transferred about US$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 US 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.
– Contact us at [email protected]