As of today, Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC), and JPMorgan Chase (NYSE: JPM) are aiming to make PayPal obsolete.

The three banks are creating a new online banking service today and aiming to replace PayPal as the go-to method for transferring funds person-to-person online. Dubbed "clearXchange," the new service will allow customers of any member bank to transfer funds to another person, or individual, knowing no more than the recipient's phone number or email address.

In this respect, clearXchange sounds a lot like PayPal. And yes, I suppose it could pose a threat to the business ... if the bankers had this bright idea 10 years ago. You see, the biggest obstacle to PayPal adoption -- to adopting any "online banking" service, really -- is the setup. Getting a customer to choose yet another screen name and yet another password. Plus the tedium of entering names, addresses, and phone numbers for each and every person in your address book whom you might conceivably want to send some money some day.

Having a bank, which already has most of your 411 on file, create this service is a great idea. Half the work's already done. And had the bankers thought of this 10 years ago, when PayPal was just getting off the ground, I imagine they might have shut PayPal out of the online payments market. Instead, they're thinking of it today, after 98 million customers have already made the effort of setting up active PayPal accounts.

Foolish takeaway
The bankers have arrived 10 years late to this party. PayPal's here to stay, and eBay's (Nasdaq: EBAY) most valuable franchise remains intact.

Who will win this contest? Big banking, or little ol' PayPal? Add its owner, eBay, to your Fool watchlist, and watch the battle play out.

Fool contributor Rich Smith has no position in any stocks named above, but The Motley Fool owns shares of JPMorgan Chase and Wells Fargo. Motley Fool newsletter services have recommended buying shares of eBay. The Motley Fool has a disclosure policy.

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