A New Bank Coalition Targets Venmo
Peer-to-peer (P2P) mobile payments have long been a bit of a sticking point for mobile payment systems. Many chose to focus on business-to-consumer (B2C) mobile, and though this did quite well, there wasn’t much going on in the P2P space. At least, there wasn’t until Venmo—which suffered from its share of security issues in the early days—stepped in to change things. Now, the market seems to be taking shape with a new competitor, a five-bank coalition forming a new system called Zelle.
The Zelle system has been in the works for some time, reports note, and will allow a massive number of bank customers—a number projected to be in the tens of millions—to send money back and forth instantly from accounts using a simple interface on a smartphone. It’s already said to have an ease-of-use advantage over Venmo, which alerts users instantly, but requires some time in order to accomplish the actual shifting of cash.
The first five to set up Zelle access for users will be J.P. Morgan, Capital One, U.S. Bancorp, Wells Fargo and Bank of America. Said banks are also part of Early Warning Services, a company which has previously been seen engaging in mobile banking operations.
At last report, Zelle’s stated purpose is to provide bank customers with a new reason to remain loyal to said banks’ operations, as well as offer a potential new tool for businesses who want to reduce paper-related costs of handling checks and cash and the like.
Granted, some of the banks involved in this consortium effort have something of a checkered past—Wells Fargo perhaps most recently—and could use a bit of a PR bump by offering a useful, valuable service that the customer base can get behind, there’s a clear business case here. Venmo’s popularity has been enough to make Apple Pay sit up and take notice, and it’s far from alone here.
While the new consortium will have a tough time pulling entrenched customers away from Venmo, the new speed advantages and potential connection to a current bank account could prove helpful in the end. Only time will tell how well it works, but Zelle may have enough going for it to draw in plenty of users.