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Zelle moves $25bn in P2P payments in Q1 in US

30/04/2018

The US bank-backed peer-to-peer (P2P) payments app Zelle has revealed it moved more than $25 billion in the first quarter of 2018, up 15% on the same period last year, from 85 million transactions, writes Neil Ainger, but press reports are questioning its security.

Zelle is the banks’ two-year-old answer to the challenge from PayPal’s Venmo, offering Americans a similar ability to send money in real-time to each other using only an email address or mobile phone number. It is a directory and overlay service, listed on InstaPay’s Tracker, that uses a fast real-time funds transfer service backbone to offer improved front-end services. Zelle is a shortened version of Gazelle to convey Speed and Agility.

Venmo processed $12.3bn in Q1 this year, meaning the Zelle service operated by Early Warning Services has already overtaken it, since its 2016 launch. No doubt this has been helped by its US bank backers enabling access via their own smartphone-based bank apps, alongside the direct connectivity available from the standalone Zelle mobile app.

PayPal has responded by expanding beyond its P2P base into the electronic e-commerce arena. Its latest quarterly results show Venmo is now available at more than two million merchants across the US. This field may also be fertile ground for Zelle in the future as the battle for volume heats up and Square, ApplePay and other such offerings converge on offering universal services. BNY Mellon has also launched tokenized payments for its corporate and institutional clients on the Zelle instant payment platform in the US, expanding its reach.

“Zelle is replacing cash and checks for sending gifts for birthdays to distributing funds to those in need, changing how money moves safely for millions of consumers,” said Paul Finch, CEO at the operators, Early Warning Services, in a statement. “In partnership with each of our participating financial institutions (FIs), we are educating consumers, while innovating to deliver safe and secure payments.”

Security concerns raised in press
The latter security assertion by the CEO, however, has been called into question in recent times thanks to press reports in the New York Times earlier this month that the service’s very ease-of-use and speed has made its customers vulnerable to attack by fraudsters.

A PwC partner, Genevieve Gimbert, told the NY Times that she knew of one bank experiencing a 90% fraud rate, but this was refuted by the company and Early Warning’s Lou Anne Alexander, head of payments, maintained there had been “very few incidents” of fraud and that the banks were “proactive” about it. Nevertheless, when it comes to security, as she herself admitted, it is never wise to put your “head in the sand” about it and a constant focus on consumer protection is a necessity for any such service. As ever, volume and uptake figures will eventually reflect customers confidence in and usage of any service and, at the moment, this is looking positive for Zelle.

 

Author: Neil Ainger