A PayPal and Apple Pay rival from the big banks is aiming big
Paze, a digital wallet for online checkouts from Early Warning Services, the consortium of banks behind Zelle, is hoping to make a splash in the payments space.
The platform, which is designed to “solve key pain points in the online shopping experience,” allows credit and debit cardholders to combine their cards into a single digital wallet, the company said Tuesday. As an added security measure, Paze also tokenizes card numbers so that merchants don’t receive card information.
The platform is now available to 125 million credit and debit cardholders at Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM), Capital One (COF), PNC (PNC), Truist (TFC), and U.S. Bank (USB) — the seven banks behind Early Warning.
The announcement comes as big banks try to fend off competition from digital wallet and online payment providers such as Apple Pay (AAPL) and PayPal (PYPL). Apple, in particular, has raised red flags for banks as it gets deeper into consumer finance.
In 2023, more than half of Americans used digital wallets more frequently than traditional payment methods, with 64% using them at least as often, according to research from Capital One Shopping. Apple Pay is themost popular digital wallet globally, with a 92% market share as of last year. In the U.S., PayPal was the most popular digital wallet, used by 71% of U.S. adults.
Catherine Murchie, head of operations at Paze, told reporters that Paze’s key differentiator is its focus on privacy, giving consumers the ability to keep their information within their own financial institution without having to share card details with merchants or other third-parties.
“Convenience, for us, is really important and security is also very important,” Murchie said. “But what made us drive to create this solution was the importance of having a bank-backed solution — a solution consumers could use that was backed by the trust of their financial institution.”
She said that more banks are expected become a part of the program later.
Paze has been years in the making, with The Wall Street Journal first reporting plans to introduce it in January 2023. Minneapolis-based U.S. Bank was the first to publicly roll out the platform in early September.
Eligible customers will be able to activate their Paze digital wallet from their bank’s mobile app or when checking out at a participating online retailer.
But the platform is also designed to benefit retailers. Major companies that offer Paze include ShopRite, small business sites made using GoDaddy (GDDY), and Sephora — the latter of which added the option to use Paze at checkout for loyalty members in late August. Murchie said more merchants are also in talks to offer Paze at checkout.
“It’s becoming crucial to ensure a convenient online checkout, as more shoppers continue to transition to a digital shopping experience,” Cameron Fowler, chief executive officer of Early Warning, said in a statement.
Early Warning also named Serge Elkiner, former global head of product for money movement solutions at Visa (V), as its general manager.
“We’re proud of our achievements so far, but this is just the beginning for Paze,” Fowler said. “I look forward to having Serge drive consumer, issuer, and merchant adoption across the U.S.”
Paze will operate separately from its sister firm, Zelle, which is used to send and receive money transfers, much like Venmo or CashApp (SQ). Early Warning has grown Zelle into a sprawling business since its launch in 2017, with 120 million consumer and small business user accounts and $806 billion in transaction volume in 2023 — up 28% from a year prior.
