The peer-to-peer payments market is booming, with consumers sending each other billions of dollars through digital apps.
One company that is capitalizing on the trend is Zelle, the digital payments company owned by Bank of America BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, Citibank, and Wells Fargo. Earlier this week, Bank of America said it has record-breaking P2P payments use with its activeZelle customers already completing more transactions this year than all of 2018. Bank of America said in under nine months, clients sent and received a total of 163 million transactions. That compares to 157 million transactions for all of last year.
“Our 37 million digital banking clients are driving the person-to-person growth trend,” said David Tyrie, head of advanced solutions and digital banking at Bank of America in a press release announcing the results.. “Thousands of Bank of America clients are adoptingZelle each week and we are on track to surpass 9 million active users by the end of the year.”
Digital payments are taking off in the U.S. as consumers get more comfortable sending money to friends, family, and co-workers through a digital app. Zelle and rival Venmo, owned by PayPal, are the leading players although others including Square Cash are holding their own. They are in a cutthroat battle to grow their customer base and become the leader in this burgeoning industry.
As of the end of 2018, there were more than 80 million mobile phone P2P payments users in the U.S., amounting to more than one-third of mobile phone users. That’s projected to hit more than 90 million by the end of this year, according to market research firm eMarketer. By the end of 2022, eMarketer predicts over half of mobile phone users or 52.5% will have made at least one P2P payment within the past month. The growth will be driven by millennials, the research firm predicted.
That’s the case at Bank of America where 68% of its Zelle users are millennials. The bank said during the second quarter customers sent and received $18 billion through 69 million Zelle transactions nearly doubling the number of transactions from last year’s second quarter. Millennial customers are using it to pay rent, split utilities, for family care and gifts. But it’s not just consumers who are using Zelle. Bank of America said 180,000 small businesses used the service since it made it available to them in June.
Zelle isn’t the only P2P payment provider that’s enjoying brisk business, rival Venmo processed $24 billion in payments during the second quarter, growing 70% year-over-year. Meanwhile Square, the digital payment company owned by Twitter’s Jack Dorsey, is seeing brisk demand for its Square Cash app, which is a direct rival to Venmo and Zelle. Wall Street investment firm Instinet said the Cash App was downloaded 2.4 million times as of the end of July. Square’s Cash App, had revenue of $135 million in the second quarter.
Not every digital payment provider is enjoying record growth. In yet another digital retreat for JPMorgan Chase in recent weeks, the bank announced its shuttering its Chase Pay mobile app. According to Bloomberg, the company began alerting users last week that they can’t use the payment service to make purchases in-stores as of the start of 2020. Chase Pay can still be used on websites and apps of the retailers that accept it as a payment method. It has already shut down Finn, its digital mobile banking app in June and severed ties with OnDeck, the online lender for small businesses.
“The change we are announcing is one that is intended to focus our efforts where we see consumer behavior trending and merchants investing,” Eric Connolly, head of Chase Pay in an email obtained by Bloomberg. “We see our biggest opportunity in working with merchants to provide easy payment solutions for customers through the Chase Pay button online and directly in merchant apps, which has seen double-digit growth for the last three years.”