The megabanks are moving in on PayPal and the other independent online payment providers.
Until now, customers of JPMorgan Chase, Bank of America and Wells Fargo had to provide a checking account and routing number to move money around.
That meant having to memorize – or look up – a lot of numbers and using bank-account-based clearinghouses to move money could have been at risk for identity theft if servers were hacked.
Now a joint venture is allowing the banks' customers to move money more conveniently and safely using nothing more than a mobile number or email address.
The new system, clearXchange, was launched nationally on May 25 and works pretty much like PayPal with one big exception – it's free. At least for now.
There's no transaction, money-moving or enrollment fee.
Down the line, each bank (and any others who join clearXchange) will decide whether to charge for the service.
Given the fact that Chase, Bank of America and Wells Fargo rarely do anything for free, we strongly suspect they want to put a serious dent in PayPal's business and turn clearXchange into a lucrative new source of income.
But right now, customers can send money to Aunt Sally for car repairs, or a college kid for books, just by keying in the recipient’s email address or mobile phone number at one of the banks’ websites or by using one of their mobile phone apps.
Funds are moved using the automated clearinghouse network, but since you don’t have to enter any bank information, the risk for identity theft drops – a lot.
One final thing.
ClearXchange services are only available in the United States. International payments cannot be made at this time.
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