EWS readies Paze to help banks take on digital wallet market


Early Warning Services, the operator of the bank-owned peer-to-peer payments platform Zelle, has big ambitions for a new digital wallet it says will make e-commerce payments easier for consumers and merchants. 

Like Zelle, the new product, called Paze, will be owned and operated by seven of the nation’s largest banks. The digital wallet is set to go live with merchants and member banks in June before a wider rollout in the fall, EWS said.

“This program has been designed from day one to be something that is available to all financial institutions in the U.S., large or small,” said Paze Managing Director James Anderson, a former Mastercard executive who joined EWS in August to head up the bank wallet program. “Our ultimate objective is ubiquity of access to Paze, both on the consumer side and on the merchant side.”

But launching a novel wallet, even with the backing of the nation’s largest banks, will be no easy feat, according to some industry experts, who say Paze will have its fair share of adoption and security hurdles to overcome to grab a slice of the digital wallet market.

The network effect

EWS, which launched Zelle in 2017, is betting Paze can mirror and ultimately surpass that P2P payments platform’s consumer adoption rate.

“You want to be more than just present,” said Anderson, on EWS’s initiatives to bring payment services back into the banking system. “You want to be in front of the queue, top of the consumer’s mind and perceived as the solution provider. I think that’s what Zelle enabled in P2P. And that’s what Paze is going to enable in merchant payments.”

More than 1,800 financial institutions are part of the Zelle network, according to figures EWS released in February.

The platform’s network of banks increased by 40% in 2022, EWS said, adding that 97% of the institutions that joined last year have under $10 billion in assets.

Consumers and businesses sent 2.3 billion payments totaling $629 billion through Zelle in 2022, EWS said.

Seven of the nation’s largest banks, including JPMorgan Chase, Bank of America and Wells Fargo, make up the consortium of institutions that owns EWS. That means Paze will automatically be loaded onto 150 million Visa and Mastercard accounts on day one, Anderson said.

But simply placing Paze at consumers’ fingertips doesn’t mean banks will automatically overcome the adoption hurdle, said Charlotte Principato, a financial services analyst at Morning Consult. 

“It’s a flawed premise that banks have or are holding on to being the primary provider for their consumer relationships. I think that that is a bank-centric notion,” she said. “Folks don’t have monogamous financial services relationships. Everyone uses multiple apps to cobble together the type of financial providers that work for them.”

Paze is launching amid a crowded and competitive marketplace, one in which users of one digital wallet are likely to use others as well, according to data from Morning Consult. 

Close to 90% of Apple Pay users say they also use PayPal, and nearly every user of any competitor digital wallet also uses PayPal, according to a study the research company released in February

Meanwhile, 65% of Google Pay users said they also use the Block-owned Cash App, and more than half of Cash App users also use PayPal-owned Venmo, the study found.

It’s imperative that EWS’s digital wallet has a top-of-the-line customer experience if it wants to differentiate from other players and become the primary digital wallet provider for consumers, Principato said.

That will be a tough hurdle for Paze, given the stiff competition from well-entrenched players Apple and Samsung, said Seth Ruden, director of global advisory at fraud prevention fintech BioCatch.

“It certainly is going to be hard,” he said. “They’ve got an amazing user experience already. That’s Apple’s bread and butter. Their design philosophy and their user experience is likely one of their strongest value articulations.”

Paze gives banks an opportunity to participate in the digital wallet race and stay relevant, Principato said.

“But I don’t think it’s a way for them to rise, in the minds of consumers, as beating out Apple Pay or PayPal,” she added. 


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