There has been a lot of activity recently about person-to-person payments. First Apple announced their intention to get in the game later this year, then Early Warning announced a few days later that a slew of banks were launching or soon would be launching P2P under the Zelle brand. And now, PayPal announced that they are adding a feature to their Venmo P2P service, namely the option to receive funds within a few minutes. This is an occasion where fintech, if you consider Venmo fintech, is imitating banking or at least feeling the competitive pressure to enhance their service to match the capability of Zelle. The Zelle service offers users the opportunity to transfer funds within minutes and those funds are made available immediately in the user’s checking account. TechCrunch reported:
PayPal has been operating in the peer-to-peer payments business for nearly two decades, but the company has been more recently challenged by a number of newcomers, like Square Cash, for example, whose key advantage has been the ability to “cash out” to your bank account instantly.
Now PayPal and Venmo will offer a similar option for debit card holders with supported cards from Visa and MasterCard. The company says the feature will be available to the vast majority of cardholders for a handful of very small institutions.
It appears that as long as the Venmo user has a bank account and a debit card, they will be able to use the new Venmo/Pay Pal instant access capability. The requirement of a debit card requirement suggest that it is likely that PayPal is using Mastercard Send and Visa Direct to handle the funds movement.
Venmo will also charge for the faster service, something we have not seen from the bank and credit union providers of Zelle.
This new “instant transfers” service will be available at a rate of $0.25 per transaction, and will deliver funds in a matter of minutes, instead of the day or so it typically takes when using PayPal or Venmo.