Bank of America (
) along with
(NYSE:WFC) is rolling out a service that will offer its customers
the ability to transfer funds to another user account using their
email address or a mobile phone number. Paypal has been a leader in
the person-to-person cash transfer service for years and growing
demand for this service has attracted top U.S. banks in this
market. Earlier this year, Visa (NYSE:V) announced that it will
venture into personal payments market by partnering with CashEdge
and Fiserv and was shortly followed by
)((See American Express Nips at Paypal with New 'Serve'
We have a price estimate of $14.92 on Bank of America's stock
implying a 30% premium to the current market price.
ClearXchange at a Glance
The personal payment service has been named "ClearXchange" and
is already introduced in Arizona. The company plans to roll out
this service in more markets in coming months and it will be
available throughout the U.S. within a year. The main advantage of
this service is that the user doesn't need to open a new account
and can use the existing checking or savings account to transfer
funds instantly. This should save time for most consumers.
What it means for Bank of America?
It is still unclear what kind of fees will be charged by banks
for such a service, but the potential market for this service is
huge considering $865 billion changes hands between Americans each
year at par. It is expected that eventually personal payments
service will be incorporated as a standard part of checking/saving
account and fee for this service will be included in the annual
account maintenance charges. The service fee which Bank of
America charges on consumer accounts stands to gain by addition of
such value added services.
See our full analysis of Bank of America here.