Zelle [1] moves money in minutes, with no charge [2], as long as your bank is a participating institution [3] and you've previously enrolled. Hard to see Paypal competing against a syndicate owned by major financial institutions (Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo).
At the same time, all of these efforts die as soon as ACH modernization arrives [4], as shown by SWIFT instant payments (which occur in a matter of seconds between institutions) [5][6].
Disclaimer: No affiliation, just a fintech enthusiast.
I didn't read the previous comment as a suggestion that they were looking to Venmo as an alternative to a checking account, but rather as a purse where money goes temporarily until it ends up at the final destination: said checking account (or another user or service that takes payments from venmo). That's how I and many services I use-like the furniture movers I paid a few weeks back-the App
My thesis is Venmo is a feature, not a product. Real banks will eventually replace the need for it (technically, they already have; the UX needs some catching up).
Zelle is usable out of the box with Chase and Bank of America in the respective banks apps (and I'm guessing other participating banks) it's kind of a paypal for banks that just works.
That may be true, but it doesn’t mean customers are going to use it. The fact that millions of 20-30 year olds in the USA tell each other “Venmo me” is quite a bit of inertia to overcome.
Then again, perhaps Zelle will capture the non 20-30 demographic, which is presumably quite large. Most 20-30 year olds have both their banking app(s) and Venmo installed, whereas many in the 30+ demographic have only their banking app.
In the 30+ demographic, Zelle is a new entrant to the “peer-to-peer payments” market, and has a first-mover advantage. Since this demographic is not as intimately familiar with p2p payments as the 20-30 demographic, Zelle has the opportunity to concept of peer-to-peer payments. That is, Zelle has a clear playing field in the battle for the “tipping-point” mindshare required to solidify its first-mover advantage in certain markets.
It would be interesting to map the “real” human social graph, and then overlay app usage onto it.
When we found out about Zelle (which our banks advertise) we switched to it immediately (me and my fiancée) it involved no effort on our part, just maybe telling them what our email was so other people can send us money by email. The rest was handled by our banks. If venmo can be that frictionless then I can see them taking over, but I wont bother installing venmo or giving it a shot now. I'm more likely to paypal someone funds if they don't have Zelle or Google Wallet.
I guess I fall somewhere in the 20-30 market though.
I use both Venmo and Zelle (through BOA). Zelle gets used by me for "real" transfers that are recurring or large one-offs. The large one-offs I still confirm in advance, because people can have multiple bank accounts and not know where their email/phone is linked. (I think it's the last one setup).
For anything small or group-related, I use Venmo. Largely because everyone (that I've ever exchanged $ with) in my social group uses it, and it's quick and easy. Examples include: food splitting, having one person buy event tickets and paying them back, airbnb/party costs, and fantasy football due collection.
So I agree, Venmo is going to be tough to overcome, I don't see anyone in my group switching to Zelle anytime soon. Zelle would have to do a lot of marketing to even get people to understand that they can do it. I was skeptical the first time I sent money with Zelle and the only reason I tried it was because BoA replaced their transfers with it.
All of your lofty pronouncements are predicated on the opinion that speedier money movement is in high demand which has been shown over and over to be false.
This is totally anecdotal, but I (and apparently many other people online) have had pretty terrible experiences with Zelle, moreso than I've noticed with other fintech services.
A family member tried to send me money, which used to work perfectly fine via the bank's older transfer methods (including PopMoney), but once the bank switched to Zelle they somehow lost the transaction completely because my bank had yet to integrate with it.
Zelle's app and help pages were terrible and directed me to create an account and download the app to get the money out. I did that and the money was still nowhere to be found. The bank customer service wouldn't touch it because it was Zelle's fault, and my family member apparently had to wait on hold for an extremely long time with Zelle to get it sorted out and get the money back in their account. I can only imagine how much of a nightmare that could have been for less financially-secure or tech-forward people.
Unfortunately the only targets for ACH modernization right now are same-business-day, which means if I send money in the morning it won't get there till the evening, and if I send it Friday at 6pm, you won't get it until Monday at 5:30pm.
The downside to Zelle is the sending limit, which is pretty low for any sort of business transaction.
Usury laws prohibit interest rates >20%, because otherwise, there are people who would actually be paying back 20% more than the amount they borrowed. In your example, that's impossible - the additional "interest" you're going to pay is never going to exceed 1% of the money you "borrowed"
As someone who's previously collected rent from multiple people, and then had to make a combined rent payment to the landlord, getting the money a day earlier often solves many logistical nightmares. Would I pay a 1% fee for it? Probably not. Would I pay a quarter? Sure
Can confirm, I've used Google Wallet multiple times recently, including last night. My experience matches what they document here, except that I've never personally seen the rare upper bounds for debit card transactions or for sending via bank account:
There was some rebranding news recently; you may see them consolidate various payment brands into the term Google Pay. But they're keeping their p2p payment feature.
Disclosure: Although I used to work at Google, I don't now and have never worked on their payment tech. I'm just a satisfied user who finds PayPal/Venmo a shady enough company to avoid when decent alternatives exist to accomplish the goal.
Listening the HT Guys podcast earlier today highlighted that apparently your transactions are not private by default—one of the hosts could inspect his contacts’ dealings with impunity.
In Denmark, we have MobilePay and it is everywhere—I very rarely need to use cash to pay someone, and it certainly has made sharing a restaurant bill a breeze.
When I used Venmo for the first time, I had this concern as well, but the cost of the transaction is private to everyone outside of the parties involved (and this isn't an options choice). I switched all my transactions to private, personally, but the public by default nature of Venmo seems very intentional. They're trying to create a social network like atmosphere around payments it seems.
They were also transferring funds within 1 business day while PayPal still took 3-4 days to process for at least a year or two. That's certainly what got me to join
The question is what is the true cost of transferring money and is Facebook losing money every time it does it in order for users to get addicted to using their service?
Oh wow great, I can pay 25 cents to banks and a startup to do something that was free and instant with cash and free and only mildly less instant with paper checks.
Venmo, PayPal et al are great examples of how the big barriers to convenience in our society are often fundamentally social and political, not technical. The technology to enable two people with smartphones to exchange money is trivial. Even the authentication bits can be made pretty trivial. But try and hook this up to where people are obligated to keep their money (banks) and to whom they must report their activities (governments, merchants, etc) and greed and other externalities conspire to ELIMINATE any savings or other benefits from the tech and actually make the situation MORE costly, less private, less safe, etc.
Venmo can give me money instantly for 25 cents is about as exciting as Facebook being able to replace my rolodex at the cost of lost privacy and contentment which is about as exciting as ugly, hard-to-navigate, and unlendable Kindle e-books being able to replace actual books from real publishers.
No, but “write out a paper check and have the other person photograph it with their bank’s app” is still the only universal and free peer to peer electronic payment method in the US.
(Cash requires trips to the teller window during banking hours if your transactions are not all multiples of $20).
Will most banks actually allow that? Taking a picture of a personal check and cashing it instantly? In my experience banks treat personal checks like radioactive waste and getting a bank to cash a check as an individual takes some doing. Last time I had a $2600 check I found out that for any check over $2500, I had to physically take it to the bank and they wanted to know why I was receiving the money.
Anything that cuts payment processors out of the loop is absolutely essential in my book. The current scenario is that the majority of our economy flows through a few payment processor companies who do nothing of value beyond moving numbers down a wire, and they charge a percentage cut for that (because apparently it costs them more to move larger numbers?). That amounts to them being a taxing body. It gives them tremendous control over our entire economy. If we don't tear them out of that position, they will counter-act any actions taken by the government to control the money supply if the government ever dares to do anything which would not maximize the payment processors profit.
In Canada they certainly didn't mind for me. When clients were sending me cheques, I don't think I ever ran into any problems cashing them using the RBC "Photo of a cheque" thing.
I ran into way more difficulties with Quickbooks Payments accepting large credit card transactions. There were invisible thresholds that seemed to trigger Know-Your-Customer (KYC) rules, and the fact that those had been triggered seemed to be opaque to Tier 1 support. As far as everyone I talked to (at both QB and at RBC) the money had vanished into the aether, until a couple days later I got a call from someone in the QB Compliance department who had a few questions.
Will most banks actually allow that? Taking a picture of a personal check and cashing it instantly?
My small credit union does this. I imagine there's corner cases & limits to how much they'll do instantly without review but it's worked instantly for me so far with several hundred dollars on a check.
Here in Denmark you can transfer any amount under about 20.000 USD instantly to other people with your banking app (amounts over 20.000 USD requires a call to the bank, at least for me, the one time i tried). We also have the mobilepay app wich makes payment, and peer to peer transfers effortless all for free. Checks ars so outdated here, that they where outlawed last year.
This is old - fashioned by all accounts, but in order to get rid of it, you need to have a good infrastructure to fill the void. Make no mistake, this is very much doable but requires planning.
I use a chèque to pay something at my children's school or other not so well connected places. Removing chèques (which I would be delighted of) means that they need specific accounts in banks (tagged with a project, a school trip,...), something which is not readily available today.
You can tag direct account payments with notes. So paying a bill or a school, you attach a note such as “payment for Pierres school trip” or “regarding invoice #1234”. Works pretty damn good here in Denmark.
I am probably trying to be too careful, it is just our tradition of chèques (which, again, I would like to see vanishing) which I now will be hard to get rid of.
We probably have the lowest online banking adoption in the world, people are attached to brick and mortar institutions which bring them nothing (I am fully online and when I ask some friends why they do not switch they do not have any rational reasons, except that they are in the same bank for 15 generations and like to pay the 10₠/month fee)
I will acknowledge, that this has also resulted in a large decline in brick and mortar bank branches. Some smaller cities, no longer have any bank, which can be/is a problem for some.
Despite all the negativity, as a filthy degenerate, I missed the previous ability to get a Paypal debit card and instantly withdrawal money sent to my PP acct with it. This should be useful..
The other day I learned that ACH transfers are going to become same-business-day sometime around April this year. Not quite instant, but a lot better than before.
Still doesn't hit the use case of cash on the weekend, but at least now the American banking system is only 20 years behind Europe instead of 50 years...
I wish the Zelle roll out wasn't so terrible. They need to release and market a stand alone app and take away Venmos base. There's no need for PayPal to be involved in my transactions.
75 comments
[ 3.2 ms ] story [ 139 ms ] threadAt the same time, all of these efforts die as soon as ACH modernization arrives [4], as shown by SWIFT instant payments (which occur in a matter of seconds between institutions) [5][6].
Disclaimer: No affiliation, just a fintech enthusiast.
[1] https://wikivisually.com/wiki/ClearXchange
[2] https://www.zellepay.com/support/how-long-does-it-take-to-re...
[3] https://www.zellepay.com/get-started
[4] https://fedpaymentsimprovement.org/
[5] https://www.swift.com/your-needs/instant-payments
[6] https://www.npr.org/templates/transcript/transcript.php?stor...
This makes checks obsolete for me. The only advantage they had was 0 fees, but now zelle is my best option for price and speed.
Or have I misunderstood something, perhaps?
Then again, perhaps Zelle will capture the non 20-30 demographic, which is presumably quite large. Most 20-30 year olds have both their banking app(s) and Venmo installed, whereas many in the 30+ demographic have only their banking app.
In the 30+ demographic, Zelle is a new entrant to the “peer-to-peer payments” market, and has a first-mover advantage. Since this demographic is not as intimately familiar with p2p payments as the 20-30 demographic, Zelle has the opportunity to concept of peer-to-peer payments. That is, Zelle has a clear playing field in the battle for the “tipping-point” mindshare required to solidify its first-mover advantage in certain markets.
It would be interesting to map the “real” human social graph, and then overlay app usage onto it.
I guess I fall somewhere in the 20-30 market though.
For anything small or group-related, I use Venmo. Largely because everyone (that I've ever exchanged $ with) in my social group uses it, and it's quick and easy. Examples include: food splitting, having one person buy event tickets and paying them back, airbnb/party costs, and fantasy football due collection.
So I agree, Venmo is going to be tough to overcome, I don't see anyone in my group switching to Zelle anytime soon. Zelle would have to do a lot of marketing to even get people to understand that they can do it. I was skeptical the first time I sent money with Zelle and the only reason I tried it was because BoA replaced their transfers with it.
People don’t care the money moves drastically faster, banks most definitely want to save on the costs of these transactions.
A family member tried to send me money, which used to work perfectly fine via the bank's older transfer methods (including PopMoney), but once the bank switched to Zelle they somehow lost the transaction completely because my bank had yet to integrate with it.
Zelle's app and help pages were terrible and directed me to create an account and download the app to get the money out. I did that and the money was still nowhere to be found. The bank customer service wouldn't touch it because it was Zelle's fault, and my family member apparently had to wait on hold for an extremely long time with Zelle to get it sorted out and get the money back in their account. I can only imagine how much of a nightmare that could have been for less financially-secure or tech-forward people.
The downside to Zelle is the sending limit, which is pretty low for any sort of business transaction.
And 1% fee is like 400% annual percentage rate. Is that even legal?
"i just overdrafted and dont want to get hit with a fee, ill pay you back tomorrow"
etc etc
https://support.google.com/wallet/answer/6285486?hl=en
There was some rebranding news recently; you may see them consolidate various payment brands into the term Google Pay. But they're keeping their p2p payment feature.
Disclosure: Although I used to work at Google, I don't now and have never worked on their payment tech. I'm just a satisfied user who finds PayPal/Venmo a shady enough company to avoid when decent alternatives exist to accomplish the goal.
https://support.google.com/wallet/answer/6285510?hl=en
Google Wallet hasn't behaved the same for me since.
Venmo, PayPal et al are great examples of how the big barriers to convenience in our society are often fundamentally social and political, not technical. The technology to enable two people with smartphones to exchange money is trivial. Even the authentication bits can be made pretty trivial. But try and hook this up to where people are obligated to keep their money (banks) and to whom they must report their activities (governments, merchants, etc) and greed and other externalities conspire to ELIMINATE any savings or other benefits from the tech and actually make the situation MORE costly, less private, less safe, etc.
Venmo can give me money instantly for 25 cents is about as exciting as Facebook being able to replace my rolodex at the cost of lost privacy and contentment which is about as exciting as ugly, hard-to-navigate, and unlendable Kindle e-books being able to replace actual books from real publishers.
Running down to the bank to cash a check is pretty damn far away from "free and instant."
(Cash requires trips to the teller window during banking hours if your transactions are not all multiples of $20).
Anything that cuts payment processors out of the loop is absolutely essential in my book. The current scenario is that the majority of our economy flows through a few payment processor companies who do nothing of value beyond moving numbers down a wire, and they charge a percentage cut for that (because apparently it costs them more to move larger numbers?). That amounts to them being a taxing body. It gives them tremendous control over our entire economy. If we don't tear them out of that position, they will counter-act any actions taken by the government to control the money supply if the government ever dares to do anything which would not maximize the payment processors profit.
I ran into way more difficulties with Quickbooks Payments accepting large credit card transactions. There were invisible thresholds that seemed to trigger Know-Your-Customer (KYC) rules, and the fact that those had been triggered seemed to be opaque to Tier 1 support. As far as everyone I talked to (at both QB and at RBC) the money had vanished into the aether, until a couple days later I got a call from someone in the QB Compliance department who had a few questions.
My small credit union does this. I imagine there's corner cases & limits to how much they'll do instantly without review but it's worked instantly for me so far with several hundred dollars on a check.
This is old - fashioned by all accounts, but in order to get rid of it, you need to have a good infrastructure to fill the void. Make no mistake, this is very much doable but requires planning.
I use a chèque to pay something at my children's school or other not so well connected places. Removing chèques (which I would be delighted of) means that they need specific accounts in banks (tagged with a project, a school trip,...), something which is not readily available today.
I am probably trying to be too careful, it is just our tradition of chèques (which, again, I would like to see vanishing) which I now will be hard to get rid of.
We probably have the lowest online banking adoption in the world, people are attached to brick and mortar institutions which bring them nothing (I am fully online and when I ask some friends why they do not switch they do not have any rational reasons, except that they are in the same bank for 15 generations and like to pay the 10₠/month fee)
Still doesn't hit the use case of cash on the weekend, but at least now the American banking system is only 20 years behind Europe instead of 50 years...
Many places in the rest of the world, have realtime money transfers.
https://support.apple.com/en-us/HT207886
There’s no fee to use Apple Pay Cash with a debit card, and it’s as fast as any other text message.