Sidetopic, but I am rather disappointed that Venmo has been pressuring me via email to embrace crypto and imagine behind the scenes they own however much, trades only get executed internally, and they do their best to extract transaction fees. To me this is the antithesis of what the crypto community was looking to stand for in terms of privacy and independence from traditional banking systems.
Venmo is pushing crypto hard because Instant Payments are coming down the pipeline from the Fed in the next 18 months (already in beta testing with a handful of smaller banks, they're ahead of schedule based on my reading of the roadmap), and that kills Venmo (and Paypal to a lesser extend) if they don't have something to pivot to.
That's what you're seeing Visa, Paypal, and others attempt to go upmarket (business payments) or branch out (crypto, Plaid acq attempt).
Venmo's core value right now is that it's ubiquitous. Everyone has a Venmo account and everyone trusts it. I paid an electrician through it yesterday -- no new Fed tech is going to replace it overnight, just like Zelle didn't kill it either.
https://www.forbes.com/sites/ronshevlin/2019/02/11/venmo-ver... (According to company reports, Zelle processed $35 billion in P2P (person-to-person) payments in Q4 2018 versus $19 billion for Venmo. For the full year, Zelle's total was $122 billion, almost double Venmo's $62 billion.) (2019)
https://www.zellepay.com/press-releases/zeller-closes-2020-r... (Zelle® Closes 2020 with Record $307 Billion Sent on 1.2 Billion Transactions, Nearly 7,000 financial institutions are represented in the Zelle Network via their customers using the Zelle common mobile app, Achieving ubiquity with banks and credit unions: Nearly 500 new financial institutions of all sizes joined the Zelle Network® in 2020)
> to company reports, Zelle processed $35 billion in P2P (person-to-person) payments in Q4 2018 versus $19 billion for Venmo.
The thing that makes this a bit trickier is that Zelle is transparently used under the hood by some banks to move money between accounts owned by the same person. I've moved thousands of dollars between two of my accounts with Zelle but the alternative would have been an ACH transfer or depositing a check to myself, not Venmo.
I know it's just one anecdote, but when splitting a check, my social circle always reaches for Venmo, never for Zelle. And yet I've probably moved more total money via Zelle because I occasionally use it for different, higher-value transactions.
There's some selection bias at play for different transaction types (including many where people might not even realize they're using Zelle) so we should be careful looking at only the headline numbers.
I don't argue that Zelle is successful but it certainly did not kill Venmo. Venmo is alive and well. I think Zelle is more useful for things like tenants paying landlords, while Venmo is more for splitting a restaurant bill, so it doesn't shock me that Zelle is processing a lot more coin.
> while Venmo is more for splitting a restaurant bill
One might assume this feature will be built into banking apps as time goes on and instant payments are ubiquitous. It's already in my Chase iOS app [1]. I argue it's a feature, not a business. I concede we'll have to see what happens when deposit accounts at real banks are given access to instant payment functionality.
> Venmo's core value right now is that it's ubiquitous
Is it? I just did a straw poll of people in my office, located in Canada. People from 28-50 no one has venmo. 3 of 15 knew about it.
Now my sample may not match the rest of the world as these are some pretty highly educated and high networth individuals so venmo isn't something that would really benefit us, but it does really weaken the ubiquitous claim
Always remember that consumer banking in the US is at least a decade behind everywhere else in the first world. Apps that allow cheap/free and fast money transfers were and still are a big deal there.
Thanks for sharing, I as well didn't know about this. I've enrolled/used Zelle (via my bank app) and it's just a travesty of usability to me, after awhile I ditched it (and I don't hear a lot in the news about Zelle these days).
What's your hot take on this new FedNow system vs. what Zelle tries to achieve via ACH? Do you think it'll be more "Venmo-like" (low friction) or will it end up a usability mess due to regulation requirements?
Zelle is owned by a consortium of the largest US banks [1], and does much more volume than Venmo (because its built into the UX of those participating in Zelle's real time payment network [2]). Congress strongly encouraged the Fed to develop FedNow to prevent Zelle from keeping smaller banks out of instant payment infra. FedNow will eventually replace the ACH system.
Hot take: banks being banks, they'll crowd out fintechs because fintechs aren't chartered banks regardless of the UX (which is why Bancorp Bank is the underlying for so many fintechs).
Now that's interesting - does that imply that the clearing delays in transfer (say your US Bank to your Brokerage, ~3 days ACH) will disappear and FedNow makes that an "instant" (within 1 day let's say) settled transfer? Very intriguing.
Yep - the goal is to move to ~real time transactions so settlement is instantaneous for most transactions with a much shorter window for settlement for those txs over some threshold (initial working docs said $25k, but it'll likely be larger by the time it rolls out).
Venmo is clearly offering a service with the conveniences and ease of use that come with it. If you do not see the value and fees of that service, you can skip it and set up your own wallet, BTC node, etc.
