Money Matters - Simplified

3 leading US banks join hands for online payment service

The three major banks are going to set up an internet exchange to allow hassle-free transfer of funds though mobiles or e-mail.

Three leading banks of the United States, Bank of America, JPMorgan Chase and Wells Fargo have come together to introduce a service that would allow customers transfers funds through text or e-mail messages.

The program would be introduced across the nation in the coming year.

Banks to start money transfer by text or e-mail
The three major banks are going to set up an internet exchange to allow hassle-free transfer of funds though mobiles or e-mail.

The service will be free at its launch, as it is being tested but a spokeswoman for the Bank of America, Anne Pace said that the bank will introduce separate fee structure for the service.

The program to be launched under the name, clearXchange will be another step forward in the growing trend of discarding cash and checks.

Dan Schatt, head, financial innovations at PayPal, the online payments branch of E-Bay Inc. that has been in the online payment business for the last twelve years, said, “This is yet another sign that the traditional payment industry’s model is looking more and more like PayPal’s.”

Increasing trend of online payments
These banks are not the only ones to introduce service that will facilitate easy money transfer. In facr Google is also starting a service for its android OS smartphones users that will allow customers pay through their smartphones instead of credit cards.

The person-to-person online payment market has been dominated by PayPal till now. The company president recently announced that the annual revenue of the company is expected to double by 2013 and reach $7 billion.

The new service by the banks will be free at its launch as it is being tested but a spokeswoman for the Bank of America, Anne Pace said that the bank would introduce separate fee structure for the service.

The service is already being tested in Arizona by Bank of America, and Wells and Fargo and JPMorgan is expected to join soon, said the banks. They have also invited other banks to join their network

Paul Stephens, director of policy at Privacy Rights Clearinghouse, a nonprofit organization of San Diego, said that as the new regulations aimed at keeping a check at the fees charged by banks for debit card transactions are coming into effect, the new service is “presumably.....is a bank money maker.”