Tests that Zelle owner Early Warning Services is conducting prove that Paze — the secure
Unlike most new wallets and card products, which rely heavily on affinity or rewards to persuade consumers to sign up, Paze will try to win over users by emphasizing its security and convenience. As the wallet nears launch, there has been an unprecedented
"We didn't develop Paze in response to gen AI, but one of the problems we're starting to see with this type of rising fraud is the countermeasures are hitting legitimate customers and making life worse for them, which gives banks a new reason to improve the online checkout experience and stop bad actors," said James Anderson, Paze's managing director.
Consumers who shop with Paze must enter a six-digit verification code every time they check out. While this adds friction, it may end up being simpler than any other new layers of account verification that banks or merchants may implement to foil the card-testing, phishing and account-spoofing scams that are already accelerating with gen AI.
Developed by the seven largest U.S. banks that own EWS,
In addition to the six-digit security code required at every checkout, consumers must also proactively enroll with their card issuers to "claim" their Paze account by accepting its terms and conditions the first time it appears within a merchant's website or after receiving an email from their financial institutions announcing its availability.
But if this wave of fraud somehow ebbs, or consumers simply aren't swayed by its messaging around security and convenience, Early Warning may have a tougher sell. Asking bank customers to jump through those hoops merely to streamline online Visa and Mastercard checkouts with no other incentive — not even a $10 or $20 reward PayPal typically offers users to activate a Venmo account — may be too great a hurdle at this time, some observers say.
"Consumers aren't asking themselves if they need another way to check out online, so I think Paze is going to have a hard time displacing existing checkout methods unless they come up with an incentive," said Nathan Hilt, managing director at consulting firm Protiviti.
Zelle didn't displace existing peer-to-peer payment methods when it launched in 2017, either, Hilt pointed out, but
"People didn't use Venmo less when Zelle came along; Zelle grew so fast because it was a game-changer for bank customers," Hilt said.
The fact that millions of merchants have yet to sign on creates strong headwinds for adoption, according to Hilt. So far Paze has signed up merchants including Omaha Steaks, Cinemark and Teleflora,
After a delay pushed Paze's initial planned rollout from this holiday season to the first quarter of next year, Paze
After Paze goes live, all banks and credit unions will be invited to join the service through EWS through a turnkey process, Anderson said. First American Payment Systems by Deluxe and Endava are assisting with integration.
When a consumer clicks on Paze as a checkout option on an e-commerce site, a Paze display pops up with a field for the bank customer to enter the email associated with the credit or debit card they want to use, which launches Paze and triggers the authentication code. All of a user's frequently used credit and debit cards from various banks are displayed within Paze in no particular order, and users may designate one as the default payment card.
Paze can also step up security checks in case of any fraud concerns, said Matt Miller, vice president of product at Paze.
"Contact information and account data is already embedded, so there's no chance for error, and SMS codes are how consumers will authenticate each transaction," Miller said. "In the pilot we found this process is actually pretty simple and quite ubiquitous, and it's become a consistent experience consumers are used to from their bank."
Paze has recently made headway in signing up several large retailers, and plans to announce those next year, Anderson said. Participating merchants must grant Paze permission to add a JavaScript software development kit to their sites, a process that takes "one or two weeks," he said.
"This is different from other wallets, because it's coming from your bank and it delivers convenience and security, which we think consumers are going to be increasingly interested in," he said.
If EWS gets enough banks and merchants on board to build awareness of Paze, it has a chance to succeed, said Hilt.
"If Paze can push more payments to be electronic and digital, that will be fantastic, but I think they have a long road ahead of them because they're trying to do the two hardest things in payments: signing up merchants and changing consumer behavior," he said.
