BoA, JPMorgan and Wells Fargo Jointly Enter the Personal Payment Market


Bank of America ( BAC ) along with JPMorgan Chase (NYSE:JPM) and Wells Fargo (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 American Express ( AXP )((See American Express Nips at Paypal with New 'Serve' Platform))

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AXP , BAC , C



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