Published on: June 21, 2017by Kate McMahon
I balked every time my twenty-something daughters told me I needed to get Venmo, but finally capitulated and today use the peer-to-peer (P2P) payment network app for convenience, and also as a verb.
Now it appears I may have to master Zelle, as well.
The Zelle P2P payments network begins rolling out this month to more than 86 million mobile banking customers in the U.S., challenging digital upstart Venmo and other cash-alternative competitors. Zelle - pronounced zell and meant to evoke the swift gazelle - s backed by more than 30 of the nation’s major banks, including Citibank, Wells Fargo, JP Morgan Chase and Bank of America.
For the uninitiated (and most likely older) folks out there, Venmo is the leading mobile app for friends and family to transfer money, split dinner checks and pizza delivery tabs and even pay a dog-walker or monthly rent. For its cult following among many Millennials, Venmo is both an app and a verb, as in “please Venmo me $10 for your share of the pizza.”
In fact, one study found that pizza is the item most frequently identified with Venmo purchases, not surprising given the target demographic. And we’re talking plenty of slices, given that Venmo processed a whopping $17.6 billion worth of payments in 2016, mostly in small transactions. It’s also no surprise that the banking heavyweights want in on the growing P2P action, which Zelle defines as person-to-person not peer-to-peer.
I was hesitant to download and use the Venmo app for security reasons. I just couldn’t wrap my head around such a casual transfer of money from my bank account to someone else through a mobile number, email or user name with just a tap on my iPhone. But I researched the app and learned it was owned by PayPal, had bank encrypted security and was named one of Fortune magazine’s breakthrough brands of 2017. I also heeded the advice in every consumer article to only use Venmo with family and friends, and to customize my privacy settings. (Beleaguered White House press secretary Sean Spicer did not and was harassed by internet pranksters in February when his Venmo account was revealed on Twitter.)
Venmo has a social component as well. Users frequently add emojis (pizza slice, mug of beer, party balloons) and comments with their payments, which a posted on a “stream” among friends. And if a friend has not paid you back, you can gently “remind” them what they owe.
In addition to Venmo, other mobile payment players include Popmoney, Square Cash and Apple Pay. Apple recently announced it would be launching a money transfer service in the fall.
Though just announced last week, the Zelle roll-out has been in the works for years. Like Venmo, the “Send Money with Zelle” app allows users to send and receive funds from one bank account to another utilizing an email address or a mobile number.
Unlike Venmo, there are no emojis or comments. And while Venmo transactions can take up to a day to process, Zelle allows for funds to be sent in minutes.
Venmo has stepped up its game in response, and plans to expand its Pay with Venmo feature to include “millions” of Pay Pal merchants. The company announced yesterday that Pay Pal and Venmo users can instantly transfer money to their bank accounts via eligible debit cards, in no more than 30 minutes. There will be a 25-cent fee per transfer.
I checked my bank (Wells Fargo) and Zelle is slated to be available to consumers online on June 28th. If marketed properly, I think Zelle will appeal to customers who want a P2P network safely entrenched in a secure, existing online bank site and app.
But I’m not sure it will be able to lure away the Venmo fans who clearly enjoy the social banter and emojis that are integral to their banking experience.
One thing is certain – the digital wallet is here to stay and there will be plenty of competition for the cash alternative. Forward thinking retailers should already be trying to maximize the mobile payment movement before there is another verb for it.
Comments? As always, send them to me at email@example.com .
- KC's View: