U.S. banks launching answer
to peer-to-peer payment app Venmo
Send a link to a friend
[June 12, 2017]
By David Henry and Anna Irrera
YORK (Reuters) - The U.S. banking industry is about to launch its answer
to the popular mobile payments app Venmo, in what is likely to be the
biggest change in years in how individuals exchange funds digitally.
Over the next week, five of the largest U.S. banks will light up their
segments of a new payments network called Zelle, executives said in
interviews. They plan to announce details of the launch on Monday, and
expect another two dozen banks and credit unions to join over the next
The long-awaited network will allow tens of millions of bank customers
to send money to each other instantly - known as person-to-person
payments - with a few taps on their smartphones. That is an improvement
over Venmo, which immediately alerts users that a money transfer is in
progress, but takes time to shift funds between bank accounts.
Customers who use existing bank payment apps may not notice much of a
change beyond marketing. Transfers will simply happen faster because the
banks are finally linking to each other, executives said.
"By coming together to offer Zelle, we are providing a large majority of
Americans with a safe, fast and easy way to move money," said Bill
Wallace, head of digital at JPMorgan Chase & Co <JPM.N>, the biggest
U.S. bank by assets.
JPMorgan, Bank of America Corp <BAC.N>, Wells Fargo & Co <WFC.N>, U.S.
Bancorp <USB.N> and Capital One Financial Corp <COF.N> will be the first
to plug into Zelle. The network is the product of an industry consortium
called Early Warning Services LLC, whose seven owners have more than 86
million U.S. mobile banking customers.
Zelle took years to establish because fierce rivals had to come together
to make it work. In the interim, Silicon Valley has made inroads into
digital payments, particularly with the young customers coveted by
In addition to Venmo, which is owned by PayPal Holdings Inc, Facebook
Inc, Alphabet Inc's Google and Apple Inc <AAPL.O> all offer payment
platforms that allow individuals to send money to each other. The banks
want to leap over those sleek but scattered offerings by connecting
their critical mass of account holders through a single network.
[to top of second column]
"Fragmentation has been frustrating for consumers," said Paul Finch, chief
executive of Early Warning. "Inconsistent experiences have made it difficult to
send and receive money between banks."
Despite losing some ground to technology companies, banks still have a big
advantage: No matter what network is used to transfer money, banks hold the vast
majority of funds.
And despite the popularity of apps like Venmo, they transfer far less money than
banks. The value of digital payments processed through non-financial firms was
one-fifth of what banks and credit unions processed last year, research firm
Aite Group estimates.
"We are excited to bring the service to everybody and anybody, regardless of
which brand of phone you have in your hand or which generation you belong to,"
said Gareth Gaston, head of omnichannel banking at U.S. Bank.
with building customer loyalty, banks hope that Zelle will reduce their costs
from handling checks and cash. Eventually, they would like to sell access to
businesses that want to eliminate their own paper-related costs.
As more banks connect and more customers use the service, sending cash to
another individual will simply involve knowing the person's mobile phone number
or email address. Later this year, individuals with accounts at banks not
connected with Zelle will be able to use its real-time features by downloading
an app and pairing it with a Visa Inc <V.N> or Mastercard Inc <MA.N> debit
In launching Zelle, banks are being careful not to confuse customers by offering
yet another payments app.
For instance, Chase will initially twin the brand with the QuickPay app its
customers already use by showing "QuickPay with Zelle" on its mobile app and
website. Eventually, the QuickPay name could fade away.
(Reporting by David Henry and Anna Irrera in New York; Editing by Lauren Tara
LaCapra and Leslie Adler)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.