March 9, 2017
By John Stewart
All eyes in the person-to-person payments business may be on Venmo these days, but a few tantalizing numbers released last week by JPMorgan Chase & Co. could indicate that a new, bank-controlled payments service set to launch this year will literally give PayPal Holdings Inc.’s P2P app a run for its money.
Venmo’s mostly mobile service, which has captured the imagination of a younger crowd with its blend of swift payments and social media, posted $5.6 billion in volume in the last quarter of 2016, a 126% year-over-year growth rate. As recently as the fourth quarter of 2014, the service had not yet reached the $1 billion mark in quarterly volume.
To capitalize on Venmo’s wild popularity—and to make some money on the free service—PayPal is planning to introduce this year a service called Pay With Venmo that will let users pay merchants for goods and services and will allow PayPal to collect acceptance fees.
But while that kind of growth has all eyes riveted on Venmo, an older, less celebrated P2P product is actually well ahead of the PayPal service and racking up respectable growth of its own. Chase disclosed last week at an investor day presentation that its QuickPay app processed $28 billion last year, up 38% over 2015, on 94 million transactions. While Venmo is undeniably enjoying sizzling growth, its dollar volume in 2016 came to $17.6 billion, less than two-thirds of QuickPay’s total. Chase also revealed that 4 million households are using QuickPay, a 30% increase in one year.
Those are impressive results on their own, but there could be bigger implications very soon. This year, Chase and six other owner banks plan to launch Zelle, a P2P payments network that will link a total of 19 U.S. financial institutions. A substantial reworking and rebranding of an earlier P2P network called clearXchange, Zelle will launch with a multimedia marketing campaign including digital and broadcast assets.
Another Zelle owner, Bank of America Corp., has already enabled the service with an update to that banking giant’s mobile app in February. Zelle officials clearly expect the other Zelle members to follow suit with their apps as they seek to use mobile to deepen customers’ engagement with their products and services. “You’re going to start to see the Zelle brand in all the banks’ experiences,” Melissa Lowry, vice president of marketing and branding at Early Warning Services LLC, told Digital Transactions News earlier this week. The bank-owned Early Warning, a Scottsdale, Ariz.-based risk-mitigation firm, is Zelle’s parent company. Zelle will also be available via a standalone mobile app.
A Chase spokesperson did not return a call from Digital Transactions News seeking comment on whether, or when, the bank might include QuickPay in the Zelle service. Clearly, the inclusion of QuickPay’s users, in combination with the P2P customers of the other financial institutions, could give Zelle a significant boost. It could also allow the fledgling service to outrun Venmo, at least for a while.
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