Need to send money to a friend or a local handyman? Right now, you'd probably write a personal check. But the three largest U.S. banks are rolling out a system that they say lets you transfer money quickly and safely using just the recipient's cellphone number or email address.
The system, called clearXchange, was unveiled in May by Bank of America, JPMorgan Chase and Wells Fargo, which call it a more convenient alternative to third-party money transfer services such as PayPal and Xoom.
Users will access clearXchange through their bank's remote banking application, and transactions will be protected by the strong security precautions that these applications typically employ.
For now, only Arizona residents who are customers of Bank of America or Wells Fargo can send money using clearXchange, and only those banks' customers can receive funds. But the banks expect eventually to offer the service to their customers nationwide, says Gabe Boehmer, a spokesman for Wells Fargo in Portland, Ore.
ClearXchange expects other major banks to join the system as well, Boehmer says.
The system is free to bank customers using it during the present trial phase. Boehmer says no decision has been made about pricing after clearXchange becomes available nationwide. But he said it might remain a free service, similar to online bill paying, for customers who use it for personal banking and not as part of a business operation.
ClearXchange could cut costs for everyone involved. Banks would save the costs of handling paper checks, and consumers the cost of buying and mailing them.
Users will be able to request the transfer of a specific sum to a person identified by an email address or mobile number. The recipient will get a message announcing the transfer, and requesting that the address or number be linked electronically to a bank account. Once that's done, the money will automatically appear in the account. Future transfers to this person will go through directly.
"This is an innovative game changer in electronic payments," says Mike Kennedy, an executive vice president and head of payments strategy at San Francisco-based Wells Fargo. "We want our customers to be able to easily send money to anyone without having to establish a new account outside their primary bank. All our customers need to know is the email address or mobile number of a friend or family member, and we will take care of the rest."
Art Dalglish is an editor and writer based in Maryland.
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