Venmo, Zelle Book Q2 Growth, Good Signs For P2P

25. July 2018.








Venmo, the P2P service owned by PayPal, took in more than $14 billion in payments volume during the second quarter of 2018, a 78 percent year-over-year increase. Company officials also seemed pleased with their efforts to introduce more revenue-attracting services to Venmo — a positive sign for the spread of P2P payments as a whole.

The Q2 earning season had already brought indications that consumers continue to warm to P2P, along with reasons for concern about the vulnerabilities of the payment method (see recent news about privacy on Venmo, for instance, or the challenges in reclaiming mistaken payments).

Venmo not only had new numbers to share — along with related comments from PayPal executives — but rival Zelle has released its latest figures, and there is a new general estimate that also helps describe their recent growth in P2P payments.

Venmo Growth

For Venmo, some of the numbers were less than detailed. That included questions about users — during the PayPal post-earnings conference call on Wednesday (July 25), CEO Dan Schulman told investors that Venmo’s “net new actives hit another all-time record high in Q2,” without going deeper.

Overall, P2P payments volume as a whole for PayPal — a figure that includes not only Venmo’s $14 billion, but also transactions conducted via PayPal and Xoom, exceeded $50 billion in Q2, a 50 percent year-over-year increase. In the second quarter, P2P accounted for about 24 percent of total payment volume, Shulman said, up 21 percent from the same period last year.

PayPal hopes to spark more P2P growth, and via Venmo specifically, through various new deals and features. For instance, Venmo recently said it was getting into payment cards — specifically, a Mastercard-branded debit card. The aim, according to the company, is to enable consumers who use Venmo to spend their balances in more places. “We are quite pleased with the surge of initial demand for the Venmo card,” Shulman said during the call, without offering specifics.

During the second quarter, PayPal added Uber and Uber Eats “to the list of major brands offering distinct Venmo buttons to their customers,” he said, referring to the Pay with Venmo service, which debuted late last year and enables consumers to use their Venmo accounts to shop at two million-plus U.S. retailers that accept PayPal.

PayPal wants to further monetize Venmo via a new service that gives customers instant access to their funds for a small fee. So far, 17 percent of Venmo consumers have used the service, Shulman said.

Zelle Growth

Venmo will have an estimated 22.9 million U.S. users by year’s end, behind Zelle’s 27.4 million, according to a recent eMarketer projection. Both could benefit from the planned Aug. 31 closing of would-be rival Snapcash, the peer-to-peer payment service operated by Snapchat.

Although Snapcash was meant to be a way for users to split a restaurant bill with friends like any P2P service, it also became a way to pay adult performers for private content over Snapchat. In fact, a Twitter search for “Snapcash” found numerous offers of erotic content in exchange for payments through the service.

As for Zelle, it processed $28 billion worth of payments in the second quarter of 2018 (against $14 billion for Venmo), which was a 17 percent year-over-year increase (against Venmo’s 50 percent increase), according to Zelle network operator Early Warning in a report issued on Thursday (July 26). About 100 million transactions were handled by Zelle in Q2.

Zelle began operations just more than a year ago, and has since processed 320 million transactions worth $94 billion. Another sign of Zelle’s growth came earlier this month when Bank of America, when reporting its Q2 financials, said that Zelle P2P transactions reached 35.1 million, up 142 percent year-over-year.

“We believe we account for about 25 percent of Zelle, and this activity will continue to grow as the industry continues to drive this as our standard for P2P payments,” said BoA CEO Brian Moynihan during a post-earnings conference call. That Q2 growth rate represents an acceleration from the first quarter’s year-over-year growth rate of 131 percent, and helps to demonstrate that Zelle has started to scale, the bank said.

The figures from Early Warning provide a glimpse of how consumers are using Zelle. “In the second quarter, consumers averaged six transactions, sending $281 on average per transaction,” Early Warning said. The Zelle operator added that 29 financial institutions are “live on the Zelle network, with an additional 119 under contract.”

NACHA P2P Figures

Another recent figure also could be cause for optimism for P2P backers, no matter what brand team they are on.

According to NACHA – The Electronic Payments Association, person-to-person transaction volume over the ACH network increased 24 percent year over year in the second quarter, to 29.4 million. During the same period, direct deposit for payroll and other consumer disbursements represented the largest number of transactions at close to 1.7 billion, which is a 4.2 percent increase. NACHA also said that close to 1.5 billion internet transactions were made, representing a 14.3 percent increase. Meanwhile, business-to-business (B2B) transactions totaled 889 million, up 8.6 percent.

P2P still has much growing up to do, and the battle for supremacy in that payments space is just getting started. But the signs coming out of the Q2 earnings season seem generally positive for P2P.

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