Tag Archives: Zelle
Outward players may have been predominant the person-to-person payments game, but fatter brands and established financial institutions are catching up with fresh features.
By Lori Breitzke, E&S Consulting
Person-to-person (P2P) payments have been around for several years. However, they are increasingly becoming a force to be reckoned with.
Javelin Strategy & Research last year deemed mobile P2P the ‘killer app that eventually produces,’ forecasting that more than eighty two million adult consumers worldwide would make a mobile P2P transaction in 2016. This figure was projected to increase to one hundred twenty six million—almost half of all adults—by 2020.
P2P payments also have made a significant influence on consumer behavior, as well as in the POS and acquirer space. Many consumers now use the P2P payment method to pay for goods and services—for example, for items bought on Craigslist, letgo and through Facebook ‘interchange’ pages, as well as for school events.
P2P has also become the payment mode of choice for payment sharing. It’s used to remunerate others for contributions to group gifts for teachers, coaches, retiring colleagues, bday celebrants and the like; to split the cost of parties; and to pay for youR portion of a group meal or collective transportation.
On the POS and acquirer side, restaurants are leaping on the P2P bandwagon by leveraging the P2P payment acceptance features of OpenTable and other table management software. Moreover, whether or not their technology accommodates P2P, restaurants love a savings from it when consumers use other P2P apps. Rather than incur the expense of accepting numerous credit and debit card payments from individual guests in a party, they need only process one transaction with one guest’s card while other individuals in the party use P2P to reimburse the cardholder.
For acquirers tho’, P2P means fewer transactions—and to increase their market share, acquirers must embrace P2P themselves. This is especially true in light of several trends, kicking off with a heightened tendency among consumers to regard P2P as “the” way to pay. Just as significant is the growing number of newcomers—and potential competitors—on the block. Facebook has had a P2P payment option for fairly some time, and Venmo, Square Cash, Boomerang and other providers have been playing in the arena, as well. In 2016, Venmo alone processed $17.6 billion worth of mobile P2P payments, a one hundred thirty five percent increase from 2015, and was named one of the best apps of the year by Time Magazine.
Now Apple has made a foray into P2P with the introduction of a P2P money transfer service through which iPhone and iPad users can send money from linked bank accounts via Apple Messages. Under terms of a partnership with Green Dot, funds received via the service can be loaded on Green Dot digital prepaid payment cards and subsequently applied to purchases made via Apple Pay.
Consumer brand loyalty to Apple, coupled with the growing presence of Apple Pay, truly could give Venmo and its like a run for their money on the P2P front. This is despite the fact that Apple’s P2P feature is restricted to its own devices and may leave the suggesting at a slight disadvantage against its format-agnostic counterparts.
Then, there are other innovative fresh P2P services like Circle, which is being touted as an innovative and wallet-friendly way for consumers to engage in digital P2P funds transfer. Circle enables consumers to text money to others for free from their mobile phones. No exchange rate markups or extra fees for transfers that involve different currencies are applied to money transfers ended with the service.
Big banks, too, are getting in on the act. The Zelle P2P money transfer service introduced by the Zelle Network consortium of banks—which includes such heavy-hitters as Bank of America, JPMorgan Pursue and Wells Fargo—is gaining ground.
Originally called clearXchange and developed in a cooperative effort among these three institutions with assistance from bank-owned risk management rock hard Early Warning Systems, the service permits money to be transferred to anyone, providing that the sender has a Mastercard– or Visa-branded debit card. It was recently re-branded with the Zelle moniker in a budge to attract a broader spectrum of financial institutions to the consortium and its P2P suggesting.
Even more of a testament to its power: Zelle’s P2P transaction volume for two thousand sixteen stood at more than $55 billion and far surpassed that of Venmo, which the latter’s parent company PayPal has publicly acknowledged. In the very first quarter of this year, Zelle processed $16 billion worth of transactions. Since this past April, almost a dozen regional and community banks have joined the network. More should go after suit given the fact that Zelle has signed agreements with such payment processors as FIS and Jack Henry & Associates, which will pave the way for participation.
Further, banks and credit unions have begun embedding Zelle P2P money transfer capabilities into their own apps. Capital One and Citi rank among these institutions. Some eighty five million customers of more than thirty of the leading financial institutions in the U.S. will be able to transfer money to others via apps.
Despite Venmo and Apple Pay, it’s a distinct possibility that through Zelle, banks will win a significant share of the P2P business. For one thing, money transferred using Zelle shows up almost instantly in recipients’ bank accounts. By contrast, money received through Venmo goes into receiving parties’ Venmo wallets and must subsequently be deposited into their bank accounts, a process that may require several days.
Security also figures into this equation, as completing P2P transactions within a mobile banking app eliminates the need for consumers to share their banking information and password with a third party.
On the roll side, there’s still a risk for banks in enabling P2P money transfers through an app—chargebacks initiated by consumers who claim they never used the app to send money to another individual who long ago spent it.
Clearly, P2P has its challenges, and some shakeout of players likely will occur. However, there are more checks in its positives column than in its negatives column, and this will be the script for the near and far future alike.
Lori Breitzke is founder of E&S Consulting. Lori’s is an pro in the payments, banking, retailing and POS industry sectors. She is co-founder and co-chairman of the Prepaid Financial Crimes Task Force of the National Branded Prepaid Card Association, a member of the ETA Risk and Fraud Committee, ETA Prepaid Legal Group, U.S. Payments Forum and on various committees and was awarded the EMF Honor Roll 2014-2015. Lori regularly blogs on payment topics at www.eandsconsultingllc.com.
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P2P Network Zelle Adds Citi, Other FIs to Roster
More banks and credit unions have joined the Zelle Network, a peer-to-peer payments platform in the U.S., reports Paybefore sister publication Banking Technology.
Zelle (formerly known as clearXchange) is operated by Early Warning Services and enables “funds to be sent from one bank account to another in minutes, using only a recipient’s email address or mobile number,” said Early Warning Services.
Fresh members include Citizens Bank, Dollar Bank, Very first National Bank of Pennsylvania and SchoolsFirst Federal Credit Union. The service will be provided by Fiserv. Earlier, Fiserv also connected Ally Bank, Bank of the West and BECU.
The vendor says its Zelle Turnkey Service “offers all the elements of the Zelle solution in a single platform.” Zelle was launched in 2016. Its early members include Bank of America, BB&T, Capital One, JP Morgan Pursue, PNC, U.S. Bank and Wells Fargo. Prior to the fresh additions, Zelle said it had access to approximately eighty five million consumers in the U.S.
In a separate announcement, Citi has said it has also joined Zelle.
Early Warning said it processed one hundred seventy million P2P payments via Zelle in 2016, totaling $55 billion in transaction value. By comparison, the popular PayPal-backed Venmo processed $17.6 billion P2P payments last year, according to PayPal’s annual report.
P2P Rising: Fresh Examine Points to a Market on the Edge of Major Growth
P2P payments are proving a big hit with junior consumers, with sixty two percent of millennials telling they use a P2P payments service, according to a fresh survey report from Bank of America. That compares with thirty six percent of all adult consumers.
What’s more, the readiness to use P2P to pay bills and lodge debts would suggest that the market could explode, the explore said. That’s because the survey found that forty five percent of non-users plan to commence using a P2P service within the next year. “Technology is developing swifter today than at any time in history, and our newest report demonstrates how consumers are embracing emerging technologies to make sense of their financial lives,” said Michelle Moore, head of digital banking at Bank of America.
Along with BB&T, Capital One, JPMorgan Pursue, PNC, U.S. Bank and Wells Fargo, Bank of America is a backer of the Zelle Network, a P2P network that processed more than one hundred seventy million P2P payments in 2016, totaling $55 billion in transaction value.
The financial institution’s “Trends in Consumer Mobility Report” also found that:
- 68 percent of P2P users commenced those services because of convenience and time savings. Other motivations include peer pressure (48 percent), fresh offerings from banks (30 percent) and no more patience with cash or checks (16 percent).
- P2P users lodge their debts quickly. That’s because sixty nine percent of those users pay back money within the same day, with about thirty three percent doing so within an hour. That, of course, raises expectations, with fifty three percent of P2P users counting on being repaid within a day, and twenty two percent wanting that money within an hour.
- The most popular use for P2P payments, at forty eight percent, are collective bills such as utilities and rent—that is, the types of bills roommates tend to split. Other main uses are collective expenses for gifts (42 percent), travel (37 percent) and dining (35 percent).
Bank of America based its findings on a survey of 1,005 U.S adults conducted inbetween March twenty and April 1.
The Whirr: CFPB Delays Prepaid Rule; SEC Denies another Bitcoin Exchange; Global Payments Launches Campus Services; More
Catch up on the thickest news from Paybefore.com last week, including the CFPB’s delay and possible switches to the prepaid rule, bitcoin and blockchain face setbacks, Zelle touts P2P stats, and more:
Zelle Makes Presence Known in P2P Arena
The latest spectacle of Zelle Network, the P2P payments platform with the funny name, is no laughing matter for contesting P2P providers. Early Warning Services, a provider of real-time payments, authentication and risk mitigation services, announced April seventeen that its Zelle Network processed more than one hundred seventy million P2P payments in 2016, totaling $55 billion in transaction value. By comparison, the popular PayPal-backed Venmo processed $17.6 billion P2P payments last year, according to PayPal’s annual report.
The Zelle Network presently includes twenty banks and credit unions, providing it access to approximately eighty five million consumers in the U.S. through the mobile banking apps of its participating financial institutions, according to Early Warning. The joint venture is comprised of Bank of America, BB&T, Capital One, JPMorgan Pursue, PNC, U.S. Bank and Wells Fargo.
Zelle’s latest success might have raised a few eyebrows in the industry. However, Sarah Grotta, director, debit advisory service, Mercator Advisory Group, is not astonished. “Banks and credit unions have been suggesting P2P solutions for many years and have built up a significant user base,” she tells Paybefore.
Grotta adds that Zelle will proceed to help banks contest with the likes of Venmo, Square and Facebook because there will be consistency of brand and user practice across the financial institutions using Zelle. “This [helps] consumers understand that regardless of where the sender and receiver hold their [bank] balances, they can always execute a transaction,” she says. “When financial institutions sold P2P under separate identities, consumers didn’t get that message.”
Early Warning will be releasing a Zelle standalone app later this year. Consumers who don’t bank with one of the participating network playmates can come in their bank debit card information to use Zelle, according to the company. Zelle enables payments to be sent, received and split using a registered mobile phone number or e-mail address.
“We’re on a mission to substitute cash and checks with a quicker, safer and lighter way to pay,” said Lou Anne Alexander, group president, payments, Early Warning Services. “With more and more of the nation’s leading financial institutions joining the Zelle revolution, we’re making mobile payments ubiquitous, opening up fresh opportunities for an entire industry.”