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US banks develop interbank system for faster payments

Friday 11 March 2016 | 01:24 PM CET

US banks like JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co and US Bancorp have develpoed a payments system they jointly own, called clearXchange, that will allow each others\' customers using their smartphone to transfer money when they split a dinner check, rent payment or vacation bill.

Bank of America is one of two that have started rolling out the system to customers. While technology companies like PayPal Holdings and Facebook Inc already offer payment apps that appeal to young consumers, the banking industry has a crucial advantage because it controls how quickly money actually moves between bank accounts.

Individuals transferred some USD 200 billion to one another using mobile phones and computers in 2015, according to Javelin Strategy & Research, reports citing Reuters. Bank executives and analysts who closely track payment systems say that, if clearXchange is fast, functional and user-friendly, banks can make up for lost ground.

Bank of America plans to announce that its customers can transfer funds instantly through clearXchange with customers of US Bancorp, which was plugged into the speediest part of the network. JPMorgan Chase & Co and Capital One Financial Corp representatives told they plan to offer the service later in 2016.

Analysts expect Wells Fargo & Co and PNC Financial Services Group Inc to do the same. Their representatives declined to comment. Those six banks are among the seven largest by deposits in the US. Regional bank BB&T Corp is also one of the seven owners of the network, but is not ready to announce its plans.

Citigroup, which has the fourth most US deposits, has not joined clearXchange. A spokeswoman declined to say why. Citigroup uses an older network called Popmoney, which is owned by Fiserv Inc, for person-to-person payments.

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