More than half of smartphone users in the US are sending money to friends, family and businesses via some type of peer-to-peer payment service.
Stocks of payment services such as PayPal, which owns Venmo, and Block, which owns Cash App, rose sharply in 2020 as more people began sending money digitally.
Zell, which launched in 2017, stands out from the pack in a few ways. It is owned and operated by Early Warning Services, LLC, which is co-owned by seven major banks and is not publicly traded. The platform serves the banks beyond generating an independent revenue stream.
“Zell isn’t really a revenue-generating enterprise on a stand-alone basis,” said Mike Cashman, a partner at Bain & Company. Versus a revenue generating machine.”
“If you are already transacting with your bank and you trust your bank, then the fact that your bank offers Zell as a means of payment is attractive to you,” said Terry Bradford, a payments specialist at the Federal Reserve Bank of Kansas City.
One limitation of PayPal, Venmo, and Cash App is that all users must use the same service. Zell, on the other hand, appeals to users because anyone with a bank account at one of seven participating firms can make payments.
“For banks, trying to compete in that space is a no-brainer,” said Jaime Toplin, senior analyst at Insider Intelligence. “Customers use their mobile-banking apps all the time, and nobody wants to give up an opportunity from a place where people are already really active to third-party competitors.”
see Video Head on over to learn more about why Banks built Zelle and where the service could be headed.