Several of the large banks behind Zelle are teaming up to create their own digital wallet that will take aim at Apple Pay and PayPal. In the face of rising interest rates, a slowing economy and inflation, there’s more competition than ever for consumer’s cash and even how their purchases are made. Apple’s recent introduction of Apple Pay Later as well as an interest-bearing savings account administered by Goldman Sachs show that apple is pushing forward into consumer financial services, and several of the large banks behind Zelle have taken notice and are teaming up to compete with Apple Pay and PayPal. Banks will have to convince people to use their solution rather than these well established services. For consumers this increased competition over digital payments could potentially be beneficial, but there are still risks to consider.
During the pandemic peer-to-peer payments (P2P) exploded in popularity. Now 64% of Americans use P2P payments apps. Digital payments are generally more secure than credit card transactions because there is a biometric component, but it is not without risk. Users are vulnerable to fraud and scams or can lose money if they accidentally send a payment to the wrong person. As a cautionary advice we recommend that if you have never used a digital wallet, make sure you do a test run and do not send large amounts until you are sure that you have the correct information entered.