Meet The New Venmo.

AuthorBagley, Judd

Local financial institutions are launching payment systems that compete with Venmo, but put the money directly into your account. Emojis not necessary.

Six years ago, nobody could say the world needed another peer-to-peer payments app. After all, PayPal had locked that space up early on. And yet, in 2012, credit card processing company Braintree saw something compelling in a startup called Venmo and paid $26 million to acquire it. At the time, then-CEO of Braintree Bill Ready said he expected "Venmo's established footing among the early adopter tech crowd will help foster its adoption and gain an edge against other payment processing start-ups."

One year later, Paypal acquired Braintree--and thus Venmo--but PayPal is content to keep that corporate relationship quiet, because among millennials in general and that "early adopter tech crowd" in particular, PayPal is to Venmo as Facebook is to Instagram. Meaning: one is cool while the other is what your parents probably use.

Deep penetration among millennials and an irresistible network effect have done much to fuel Venmo's consistent triple-digit growth post-acquisition. With numbers like that, traditional financial institutions can't be blamed for putting their differences aside and working together to find a way to siphon off a piece of the more than $10 billion flowing through Venmo quarterly.

Enter Zelle.

ZELLE IS THE NEW VENMO ... FOR BANKS

"We're about to deploy a new peer-to-peer payment system, which is part of Zelle, an app originally created by the big national banks to compete with Venmo," says Chad Dilley, SVP of Channel Strategy at Zions Bank. "[Zelle] rolled out initially to the bigger banks but now they're including regional banks and credit unions."

Mr. Dilley says Zelle integrates into participating institutions' existing mobile apps and permits users to transfer funds in near real time directly to other users' easily locatable accounts. He says Zelle has a few advantages that users will find even more compelling than Venmo's emojis and social components--which have thus far proven to be millennial catnip.

"With Zelle, not only do you get to skip Venmo's cumbersome setup process, but the money goes directly to your account. There's no intermediary step where you have to initiate the two- to three-day transfer. We're banking on that increased functionality and ease of use as a differentiator that will hopefully drive clients to adopt Zelle over Venmo," he says.

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