Zelle, Venmo Continue Battle Over P2P Mobile Payments Dominance

July 31, 2019         By: Steven Anderson

Before Venmo arrived, for the most part, mobile payments were strictly between businesses and consumers. The notion that people might want to pay individuals through mobile payment systems seemed outlandish, and was commonly left untouched. Enter Venmo, who showed us all there was a brisk business waiting in peer-to-peer (P2P) mobile payments. It didn’t take long for competitors to show up, and easily the biggest of these was Zelle, a creation of a coalition of banks. Now, the two are the leaders in the field, and fighting hard for dominance.

Zelle has only been around for two years, and in that time, it’s made substantial gains. It currently works with enough banks and credit unions out there that about three out of five checking account holders in the US can access Zelle and put it to work, paying for things directly from their smartphones. Gains are expected to continue climbing, and once everybody’s in that can be in, reports note, that number will hit nearly two out of three accounts, about 64 percent.

The numbers Zelle has put up in that time frame are nothing short of staggering. In the second quarter of 2019, it reached 171 million total transactions valued at a combined total of $44 billion. That dollar value is up about 13 percent from the first quarter and 56 percent in year-to-year comparisons.

What’s especially telling, though, is that Zelle started out as a hit among the younger consumers, especially millennials, who are more accustomed to doing business by smartphone. By late 2018, though, it was found that half of all first-time Zelle users were actually over the age of 45.

Essentially, at the same time that Zelle was seeing huge gains in its overall use figures, it also saw its biggest gains in over-45 users. Once the older users got into the fray, the total value and number of transactions took off as well. This suggests that the older folks, who tend to be doing pretty well on the disposable income front, came in in a pretty big way.

Mobile payments are bringing value to users of all ages and demographic preferences. It’s abundantly clear that Venmo is in for a serious fight here, given how quickly Zelle has caught on.