Zelle vs Venmo vs Your Credit Union

By Robert McGarvey

The big guns are blasting, consumers are switching to p2p, mega banks are cashing in and where exactly does that leave you?

Several reports now are out on p2p and the inescapable conclusion is that Americans like p2p.  A lot. Many billions of dollars worth.

In a report written by Cornerstone’s Ron Shevlin and commissioned by Q2, Shevlin said “Consumers will rack up roughly $478 billion in P2P payments in 2018—a little more than half of that going through their banks or credit unions.”

Hear more from Shevlin in his CU2.0 podcast here.  It’s a lively look at “Is the Party Over?”

Surprisingly, PopMoney – once written off as dead by many – is at least on life support, per Shevlin’s research.  He said 7% of consumers use it. Will that number grow? Hard to say but PopMoney does not look like a big winner in this race.

The big winners are financial institutions – account to account transfers – and also big bank owned Zelle and PayPal owned Venmo.  Also PayPal itself.

Per Shevlin’s numbers 48% of consumers use PayPal.  27% use bank p2p. 22% use Venmo. 12% use Zelle.

But money talks and in 2018 transaction volume Shevlin shows banks ahead at $172 billion in p2p.  PayPal logs $142 billion. Zelle comes in at $122 billion. And Venmo lags at $64 billion.

A Pymnts p2p report offers another calculation: “Venmo posted an 80 percent spike in transaction volume, hitting $19 billion in the fourth quarter of 2018, according to PayPal’s most recent financial earnings release. When it came to total P2P volume, including transfers sent through the core PayPal service, the Q4 volume hit $39 billion.

That last figure was ahead of Zelle’s reported payment volume of $35 billion during the fourth quarter of 2018, but there’s a hitch to that — that $39 billion was for the entire PayPal network, not just Venmo for that quarter.”

Slice the numbers as you wish, a clear takeaway is that a lot of consumers are all in on p2p.  

Another takeaway, per Shevlin, is that this is not a winner take all contest.   “Roughly half of consumers between the ages of 21 and 53 use three or more providers. In contrast, just about a quarter of Boomers do so,” wrote Shevlin.

Surprised? Don’t be. How many of us use just one credit or debit card? Personally I have three or four in active use and that’s a rather typical number.  Apparently similar shows up with p2p tools too.

Wrote Shevlin: “Banks and credit unions are getting a share of the [p2p] pie—and the expansion of Zelle may further drive volume to financial institutions—but they will have to operate in an environment where consumers make choices on which P2P provider to use on a transaction-by-transaction basis, and will have to learn how to provide value in a multi-provider world.”

Incidentally, credit unions and smaller community banks are in fact embracing Zelle.  The Pymnts report noted that, per Zelle, 77% of FIs in its network state assets equal to or less than $1 billion.

The bottomline action item that emerges from the new research is that your credit union needs a p2p strategy. Sitting on the sidelines is not a smart move.  Consumers, especially younger ones, want p2p but there is ample evidence that many Baby Boomers too are using the tools (if only to shift money to their young relatives).  

Is PopMoney alone good enough? So think both of the credit unions I belong to — it’s the only p2p tool on offer by them – but the reality is that I use PayPal multiple times monthly. I do not recall the last time I used PopMoney but it was many years ago.  I also have Zelle connected to a Chase account.

So my credit unions are sidelined from my p2p, except that one is used to fund some PayPal transfers. A thankless task.

The question for credit unions is simple. Do you want to be an active player in p2p – or do you want a minor role?  To go active my advice is to look hard at Zelle and definitely also PayPal and Venmo.

P2p has become a mainstream money movement tool.  It shouldn’t be ignored. Give your members the tools they want and will use. Ask them what they want. And listen to them.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto.