P2P leader Venmo has a serious competition coming. Nineteen banks including Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo etc. are teaming up to launch Venmo like mobile application called Zelle. For a long period of time, millennials have been using third party application like Venmo to split checks and shared utility bills. In response now, banks are trying to draw these younger customers that are currently beyond their mainstream audience.
What is the difference?
As a P2P payment method, Venmo stands as a middle-man between any transfer. Amount sent first goes to receivers Venmo account and from there, they need to cash it out to their bank account. Using Venmo Instant cashing out is chargeable. With Zelle, banks propose to eradicate the need of this middle-man, so when any transaction, the amount sent from the sender would directly get transferred from his bank account into receivers account.
I believe inspite of banks efforts, Venmo has huge advantages because of its popularity and widespread user adaption. Venmo processed $17.6 billion in transactions last year, a 135 percent increase from the previous year. Now-a-days, “to Venmo” has become a common vernacular, meaning to move money to and from friends and family therefore, I believe it’s difficult for people to give up their habits of “to Venmo” soon.
Reference: https://www.bloomberg.com/news/articles/2017-02-22/big-banks-declare-war-on-venmo