The burgeoning mobile-payment industry that allows consumers to buy stuff in stores with their smartphones has been led by technology giants such as Apple Inc. and Alphabet Inc.’s Google.
Now, Wells Fargo & Co. wants a piece of the action.
The San Francisco-based bank is expected to announce Tuesday that its Wells Fargo Wallet will be available this summer for customers who download the bank’s app on their Android phones. The bank said about 5 million, or 38%, of its app customers have such phones.
“We want customers to use their Wells Fargo accounts,” said Jim Smith, executive vice president and head of Wells Fargo Virtual Channels. “The way we do that is just make it convenient and make it part of their daily routine.”
Wells Fargo joins JPMorgan Chase & Co., which announced its own mobile-payment service last year, in taking on Apple’s Apple Pay and Google’s Android Pay as well as offerings from Samsung Electronics Co. and others.
With mobile wallets such as the one Wells Fargo plans, consumers enter their credit card information in their phones before shopping with merchants who use NFC, or near-field communication, technology. The consumer holds the phone over a payment terminal and taps a button on the phone or enters a PIN. The credit card is then charged and the sale is completed.
Wells Fargo customers already can use their Wells Fargo credit and debit cards as payment sources – along with cards issued by other financial institutions, if they choose – when they use Apple Pay, Android Pay and other providers to make a purchase.
So the Wells Fargo Wallet would, in effect, allow its customers to bypass the Android Pay app and use only the Wells Fargo app to buy something.
The bank said the service mainly would benefit the bank strategically, at least at first, by giving it “a richer understanding of the quickly evolving payments landscape” that would enable Wells Fargo to “be better informed to innovate.”
The service would not be available on Apple iPhones because Apple places limits on the outside use of its technology. But Wells Fargo customers can keep using Apple Pay, Android Pay and Samsung Pay with a Wells Fargo account as their payment source.
About 2.8 million Wells Fargo customers currently use their Wells Fargo cards as a payment source for third-party mobile wallets.
To lure customers from those apps, Wells Fargo is touting the fact that customers will be able to instantly check their account balances before and after making a purchase with Wells Fargo Wallet, without having to move back and forth from a different mobile wallet.
“We think this will introduce a whole new segment of customers,” Smith said. “For the 5 million Android phone users we have, it’s integrated right into their experience.”
JPMorgan’s payment service called Chase Pay uses a different technology, called CurrentC, so the number of merchants and retail locations available for its service varies from those using the NFC technology.
CurrentC is being deployed by a consortium of retailers. Wal-Mart Stores Inc. is developing one based on its existing smartphone app.
While mobile-wallets have drawn the attention of Silicon Valley and Wall Street, the conflicting technologies, confusion about which merchants accept which mobile wallets and security fears have limited consumer adoption, analysts have said.
Also, the idea of paying for goods and services at the point of sale with a phone app, instead of with a conventional credit or debit card, continues to draw a guarded response from Americans so far, the analysts said.
Even so, the total value of mobile-payments transactions this year is expected to reach $27.1 billion, more than triple from last year, and could reach $210.5 billion in 2019, the research firm EMarketer Inc. estimates.
The Federal Reserve Board reported in March that the “use of mobile banking continues to rise” and that 28% of smartphone users had made a mobile payment in the prior 12 months. But many of those transactions involved paying bills.
The shift from plastic to phones for buying goods and services in stores also is part of a broader trend toward consumers making more financial transactions with their phones.
Wells Fargo and JPMorgan Chase plan in the next few months to roll out ATMs that let customers withdraw cash using their phones instead of debit cards. Wells Fargo expects to have about 5,000 ATMs equipped for smartphone use by the end of the year. Bank of America already has about 600 such ATMs operating, mostly in the Bay Area, and will add thousands more by the end of the month.
FOR THE RECORD
11:21 a.m.: A previous version of this story said that Bank of America had not yet rolled out ATMs that allow customers to withdraw cash using their smartphones.
“Twenty years ago, the big talk was that paper checks were going to go away in five years,” Smith said. “I’m reluctant to make any predictions about the demise of plastic cards, but you’re going to start to see ever-increasing use of mobile wallets.”
Bryan Yeager, an analyst with EMarketer, said it’s questionable whether Wells Fargo’s latest move will accelerate the mobile-wallet business, but he said that if other financial services industry players join the bank it could make a difference.
“When it comes to keeping your money safe and secure, making sure fraud doesn’t happen and not having third-party advertising, the banks have a pretty good reputation,” Yeager said. “When you look at surveys of who consumers trust when making payments, banks and financial services firms top out on the list.”
But Dave Godsman, emerging payments executive at Bank of America, said his bank currently has no plans to match Wells Fargo’s mobile-payments service.
“We’re enabling our customers to choose whatever wallet they prefer,” he said.
Times staff writer James Rufus Koren contributed to this report.
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10:24 a.m: This article was updated with a statement about Wells Fargo’s strategic goals.
This article was originally published at 3 a.m.