How Zelle differs from Venmo, PayPal and CashApp

More than half of smartphone users in the US send money through some sort of peer-to-peer payment service to send money to friends, family, and businesses.

Shares in payment services like PayPal, which owns Venmo, and Block, which owns Cash App, have surged in 2020 as more people have begun sending money digitally.

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Zelle, launched in 2017, stands out in several ways. It is owned and operated by Early Warning Services, LLC, which is jointly owned by seven major banks and is not listed on an exchange. The platform serves banks for more than just generating an independent revenue stream.

“Zelle is not really a stand-alone income-generating enterprise,” said Mike Cashman, partner at Bain & Co. compared to an income-generating machine.”

“If you already transact with your bank and trust it, the fact that your bank offers Zelle as a means of payment is attractive to you,” said Terry Bradford, payments specialist at the Federal Reserve Bank of Kansas City. .

One of the limitations of PayPal, Venmo and Cash App is that all users must use the same service. Zelle, on the other hand, is liked by users because anyone with a bank account with one of the seven participating firms can make payments.

“It’s not difficult for banks to compete in this area,” said Jaime Toplin, senior analyst at Insider Intelligence. “Customers use their mobile banking apps all the time, and no one wants to cede opportunities from a space where people are already really active to third-party competitors.”

Look video See above for more on why banks created Zelle and where the service could go.

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