Can big banks catch up to Venmo with P2P payments app Zelle?

Digital disruption has impacted just about every industry and one could make an argument that perhaps nowhere is the disruption more evident than in financial services.

Despite the fact that entrenched financial services firms, including big banks, have almost unfathomable amounts of money, in almost every financial services market, upstarts have sought to dethrone the entrenched players.

One such market is payments, and specifically, peer-to-peer payments.

In 2009, two university students created Venmo, a person-to-person (P2P) payments solution, because they found settling a small debt to each other was more troublesome than it seemed it should have been. Since then, the Venmo app has taken off and is so popular with millennials that in the US the word “Venmo” is a verb. Splitting a bill and need your friend to settle her portion? “Venmo me.”

In 2012, payments company Braintree acquired Venmo for approximately $26m, and a year later, Venmo found a home at PayPal when the digital payments giant purchased Braintree in an $800m deal.

Today, Venmo processes tens of billions of dollars worth of payments per year and is still growing like a weed. In fact, in the second quarter of the year, it processed $8bn in payments, a more than 100% increase year-over-year.

As Econsultancy contributor Charles Wade observed, “Companies like Venmo…are outflanking traditional players by combining genuinely useful capabilities, like splitting payments across a group, with zeitgeist features such as transaction history in a social media-style feed, replete with comments.”

For obvious reasons, established players can no longer ignore upstarts like Venmo and thus, they’ve been busy developing their own alternatives.

The establishment’s “Venmo-killer” is called Zelle and it’s finally here. More than 30 banks, including Bank of America, Citi, JPMorgan Chase and Wells Fargo, as well as a number of large credit unions, are on board with Zelle.

So how…

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