Zelle Is Giving Venmo a Run for Its Money – Will You?

When Early Warning approached CO-OP about partnering on Zelle, the advantages were clear.

Will a new real-time, person-to-person payments network give Venmo a run for its money? This question was in the news recently, and though Early Warning’s new Zelle network isn’t the first to try to unseat Venmo, backing from the nation’s largest banks and multiple payment networks – including CO-OP – make Zelle a contender to watch.

“This is a great time for us to move [person-to-person payments] from Millennials to mainstream,” Lou Anne Alexander, Early Warning’s group president for payments, told Bloomberg. The use of mobile banking apps is expanding exponentially, creating many more opportunities for people of all ages to send and request money. “Any place we see checks and cash, that’s our target,” she said.

What sets Zelle apart from its Millennially-driven rival, Venmo? Here are a few features:

  • Because financial institutions are behind Zelle, movement of money directly from one account to another is direct, instead of flowing into a third-party account like Venmo.
  • Zelle may be able to capitalize on the trust factor: Because it “belongs” to a consumer’s financial institution, users might be quicker to deploy it for larger transactions and a broader range of uses.
  • Zelle lacks the social component of Venmo, whose users sometimes log into the app just to see what friends have been “up to.” For those who don’t want their financial transactions documented socially, though, this could be a plus.

A great fit for CO-OP’s digital payments strategy

When Early Warning approached CO-OP about partnering on Zelle, the advantages were clear.

With participation from so many financial institutions – including the nation’s largest banks – Zelle promises to expand the reach of real-time P2P for CO-OP clients and their members dramatically.

Zelle is both an evolutionary – and revolutionary – addition to CO-OP’s digital payments strategy. Zelle provides a good strategic counterpoint by bringing new scale to CO-OP’s P2P presence via expansive participation from financial institutions (FIs) – including the nation’s largest banks. “We had been looking for partnerships to significantly broaden our out of network P2P capabilities.  Integrating Zelle into the CO-OP environment will enable our credit unions and their members to connect with tens of millions of account holders in FIs across the U.S.” says Tom Brennan, CO-OP Senior Product Manager. By leveraging our current infrastructure and connectivity, CO-OP Clients will be in a unique position to offer Zelle to their members in an efficient and timely way.

In the current payments environment, scale is critical: “If you look around in the market there are a lot of fintech companies and pseudo fintech companies that have created payment platforms,” says Brennan. “But barriers to entry are becoming much higher to achieve competitive scale, and new entrants are starting to decline.”

Consumers, too, are looking to keep things simple. “People have multiple payment applications on their mobile phones,” says Brennan. “They may have their credit union’s mobile banking app, then Venmo and Facebook messenger. Everybody’s got multiple ways to get through and do the same thing.”

Partnering with Zelle helps ensure that CO-OP can offer credit unions a range of solutions that includes the best of the best in payments. “The CO-OP team managing the Zelle integration is focusing their efforts on the development of the new User Interface and Experience as well as redesigning the systems that manage the flow of the payment transactions” says Brennan.

This, combined with the security expertise of Early Warning, offers high hopes for what’s to come. Stay tuned for developments on availability later this year.