Banks Giving Fintech a Run for Their Money in P2P Payments

by Sarah Grotta 0

p2p

An article in Business2Community makes the argument that the bank-based  person- to- person payment solution Zelle is winning the P2P race:

The old adage “slow and steady wins the race” might be very apt for how banks have approached P2P payments. While Millennials were flocking to Venmo and the Cash App to split restaurant bills and pay one another back for other purchases, FIs were locked in their walled gardens, often limited to allowing P2P transfers within their own networks. But that began to change last year with the launch of Zelle.

The article also includes a collection of ads and other promotional materials that banks are using to promote Zelle, and notes the latest published statistics on Zelle usage:

At the end of April, Zelle announced that more than $25 billion moved through its network in Q1 2018 (an increase of >50% from Q1 2017) on 85 million transactions. Over a third of those transactions (29 million) were through Bank of America, which saw $9 billion in volume. Although more than 100 financial institutions are now partnering with Zelle, FI awareness is still ongoing, and so we are sure to see additional growth this year. 

The article additionally repeats the points made in an article from the New York Times that discusses some of the fraud issues that occur with Zelle.  These issues are real; consumers do believe that when they make a purchase from another consumer, they should be afforded the same rights as a card purchase from a vetted merchant.  Some of the most provocative statements in the referenced NYT article have since been retracted, however.  The retraction can be found here

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group