June 19, 2018
P2P mobile payments in the U.S. began to take off when millennials started to use Venmo as a verb to describe making a payment to another person using a smartphone. Venmo, PayPal’s P2P app, became the most used P2P service in the U.S., but that status will change this year, according to a report from eMarketer. The New York City-based market research firm said Zelle, the P2P platform owned by a consortium of the nation’s largest banks, will overtake Venmo this year by number of users.
Venmo built its user base slowly since its launch in 2009, helped along as it was acquired by e-commerce processor Braintree in 2012, which was then acquired by PayPal in 2013. It reached more than 17 million users in 2017 and eMarketer expects that number to grow to nearly 24 million by the end of this year.
Zelle, on the other hand, was launched by Early Warning Systems—a joint venture between Bank of America, BB&T, Capital One, JPMorgan Chase, Wells Fargo and others—to enable mobile P2P payments between bank accounts. The company says 100 financial institutions are now participating. Because Zelle works as part of bank customers’ familiar mobile banking apps, the service has been able to add users quickly, reaching about 15 million in its first year. eMarketer said it expects that number to grow to nearly 27.5 million by the end of 2018.
“One of the main hurdles new apps face is building trust and a sizable audience,” said eMarketer forecasting analyst Cindy Liu. “But Zelle has leapfrogged the early stages of adoption by having the benefit of being embedded into the already existing apps of participating banks.”
eMarketer expects the total value of mobile P2P payments in the U.S. to grow 37 percent this year to reach $167.08 billion. The company predicts it will surpass $300 billion annually by 2021.