BUSINESS

Major U.S. Banks Launch Venmo Competitor Zelle

The app is touting the quick turnaround time for transactions, but toppling the status quo will be a tall order

BUSINESS
Illustration: Vocativ
Oct 24, 2016 at 6:02 PM ET

Bank of America, Capital One, Chase, Wells Fargo, and 19 other financial institutions announced plans for their money-transfer app, Zelle, which is meant to rival person-to-person payment platforms such as Venmo and Square Cash, according to a Recode report.

The news broke at the Money 20/20 payments conference in Las Vegas on Sunday, detailing that Zelle, which will launch in 2017, is built on top of the banks’ existing payment systems. This detail is also what will give the app its greatest selling point: the ability to for transaction recipients to instantly access funds. Zelle is ostensibly named after a gazelle and will be touted for its transfer speed, where presumably users will “zelle” each other payments just as they currently “venmo” them. But despite the big-name backing, the app still faces the uphill battle of getting people to ditch Venmo.

Over the last few years, a slew of free mobile payment services and digital wallets failed threaten the dominance of Venmo. Square Cash, run by Twitter CEO Jack Dorsey, is not considered a money maker three years into its existence, and charges for instant deposits. (Venmo only charges a 3 percent fee if your payment is linked to a credit card.)

What other mobile pay apps haven’t captured is the user experience of Venmo, which still reigns supreme as a favorite among younger audiences thanks to its social network-esque interface that lets people publicly broadcast payments with fun, typically emoji-filled caption. That functionality and popularity is why PayPal—itself the first-draft user-to-user payment system—bought Venmo in 2014 (and has since redesigned its user experience to look more like Venmo’s).