Kai Ryssdal: We can talk all we want about consumer spending and retail sales and corporate profits, but the whole thing comes crashing down without a way to get the money from one place to another. There’s cash — which is usually great. Electronic wire transfers for big amounts. There’s PayPal for online retail.
And a development today that might well be the future of spending, another stab at what’s often called the digital wallet. Bank of America, Wells Fargo and JPMorgan Chase are making a joint play to let customers send money to each other with just an email address or a cell phone number. Marketplace’s Stacey Vanek Smith reports.
Stacey Vanek Smith: The new service allows customers — armed with nothing more than a smartphone — to log into their checking account, enter a cell phone number or email address and transfer money instantly. You can only use it to send money to another person — like sending birthday money or answering that time-honored college student plea.
Song: Dear mom and dad, please send money, I’m so broke, it ain’t funny.
Wells Fargo’s Mike Kennedy says people transfer about $865 billion to each other every year.
Mike Kennedy: The primary way people are doing that is old-fashioned cash and check. And they’ve come to us and said, we want to be able to do electronic.
Banks are under a lot of pressure to go mobile. They’re already losing business to online payment sites like PayPal, and credit cards will soon have to contend with cell phone payment options from companies like Google.
Ron Shevlin is a banking products analyst with the Aite Group.
Ron Shevlin: Offering these mobile capabilities is a way to continue to stay connected with the customer base, give them more convenience for payments. And it also produces an incredible data stream.
Which banks can use to sell those customers more products. Andrew Davidson, with Mintel ComparMedia, says this is also the final front in the banks’ war on cash.
Andrew Davidson: The real big piece of business for the banks is still to get people to shift their habits from using cash to using cards and electronic forms of payment.
Banks cut check processing costs and can charge new fees. The service is only in Arizona now, where it’s free; it will roll out nationally over the next year. And the banks will decide how much to charge.
In New York, I’m Stacey Vanek Smith for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.