This post has been updated.
Big banks are eager to take on PayPal’s Venmo money-transfer app, and they’re banding together in their efforts to do it.
At its investor day on Feb. 23, JPMorganChase confirmed that a new, bank-led money-transfer service is scheduled for release later this year. Customers of the banks involved—Chase, Bank of America, Wells Fargo, Capital One, BB&T, PNC, and US Bank—account for 60% of US consumers with mobile apps, Chase said in its presentation.
Last year, consumers transferred $379 billion through online and mobile, according to research firm Javelin Strategy.
The service won’t be a separate app, but will have a “single consumer-facing brand,” according to a copy of the presentation. Most banks have their own money transfer service built into their mobile apps, like Chase’s QuickPay. These services could be rebranded into something more cohesive, but it’s unclear whether this will be the case.
The coalition of banks will allow customers to send money to each other for free and in real-time, even if they don’t use the same bank—something they’re well-equipped to do since banks control the rails of the payment system. So, Chase customers can send money to their kids, who might use Bank of America, who in turn can pay for rent by sending money to their roommates who bank with Wells Fargo.
The new service will use the fraud-detection service Early Warnings Systems and the money-transfer service ClearXchange, which are jointly owned by the banks in the consortium. In November 2015, the Wall Street Journal reported Apple and ClearXchange discussed a peer-to-peer service in Apple Pay. The development of a money-transfer service between big banks doesn’t completely rule that out—on the contrary, a relationship now could help Apple’s rumored peer-to-peer messaging system to be instant and more secure than others.
Venmo, which PayPal acquired through its $800 million purchase of Braintree in 2013, is one of the hottest money-transfer apps. It processed $7.5 billion in transactions in 2015, and $1 billion in January 2016 alone.
But Chase’s own QuickPay service is big, too. The bank says it processed $20 billion in 2015, and Chase confirmed that QuickPay processed $2 billion in January 2016—double what Venmo did.
A new service could help banks connect with the sought-after US millennial demographic. Chase says 57% of all new checking accounts created in 2015 were from 18-to-35-year-olds.