Zelle Users at BofA Defy the Pandemic Gravity

Payment card usage in the U.S. might be taking a hit during the Covid-19 pandemic, but not the Zelle person-to-person payments service among Bank of America Corp.’s customer base.

Charlotte, N.C.-based BofA reported Thursday that it had 11.3 million active Zelle users, including small businesses, in the second quarter, up 41% from 8 million a year earlier. These users made 117.2 million payments worth $32 billion compared with 68.9 million transactions worth $18 billion in 2019’s second quarter. Those figures represent year-over-year growth of 70% in transactions and 78% in volume.

The average Zelle transaction size was $273, up 5% from $261 a year ago, according to BofA data. BofA also reported 94% transaction growth among its Private Bank customers, though it didn’t give raw numbers.

Zelle is a national service offered by the bank-owned Early Warning Services LLC. Recent numbers from Scottsdale, Ariz.-based Early Warning for the full Zelle network were not immediately available.

Like several other large banks that reported second-quarter financials earlier this week, BofA’s combined credit and debit card spending fell as the pandemic spread in late winter and early spring and states imposed stay-at-home and business-shutdown orders, with debit cards faring better than credit cards. BofA said total payments were down 36% year-over-year at their April low point but were down less than 10% by quarter’s end.

“Debit spend improved steadily, as states reopened and consumers used their cards for more essential spending, retail, services and restaurant spending,” BofA said in its earnings presentation. “In the last three weeks of June, YoY [year-over-year] debit spending was up 10% on average, and continued at this higher level into July due to 4th of July holiday momentum. While credit spending was down 40% YoY at its lowest point during [the second quarter], it slowly improved during the quarter, and was down 10% in the first week of July. Credit spend has been slower to improve, as it is more typically used for non-essential spending like travel and entertainment.”

BofA reported debit card purchase volume of $89.6 billion for the quarter, down 2% from $91.2 billion a year earlier. Over the same period credit card purchase volumes fell 24% to $53.7 billion from $70.3 billion.