Zelle, the peer-to-peer (P2P) payment tool developed by Early Warning and rolled out by Bank of America in February, has been called a "Venmo killer" by The Wall Street Journal. But can it live up to the hype? To find out, BI Intelligence tested Zelle for ourselves and spoke with Mary Harman, head of enterprise payments at Bank of America. Our surprising conclusion: Zelle has the potential to do much more than disrupt P2P incumbents like Venmo. It could be the killer app that brings P2P payments to older generations like Venmo did for millennials, upending the entire digital-payment space.

2017 P2P EcosystemBI Intelligence

To understand why Zelle is being branded a Venmo killer, some background is necessary. Zelle is a P2P app and website owned by bank security network Early Warning. Bank of America is the first bank to support Zelle, but a growing number of its peers, including JPMorgan Chase, Citibank, and Wells Fargo, will soon follow. Zelle is a rebranding and upgrade of clearXchange, which was a previous bank peer-to-peer tool banks offered in mobile or online banking.

Zelle will be released in phases, initially offered to users as a feature by banks in mobile or online banking with no branding. Eventually, Zelle will exist as both a standalone app and as a branded feature in banks’ digital banking portals.

Zelle was designed to bolster banks who have been hammered by competitors in mobile P2P payments — a growingly important payment method. Here’s what’s happened so far:

  • Venmo’s key features have captured a fervent youth following. Driven by millennial users, the mobile-primary P2P provider Venmo has processing huge volumes: $17.6 billion overall in 2016. Those figures are growing rapidly – Q4 2016 was Venmo’s 14th consecutive quarter of more than 100% growth. Young people love the app for its Facebook-like payments feed, which lets them see what their friends are paying for. The feed is populated by users who are required to write a description, or use emoji’s, for each payment. Privacy-conscious users must adjust a feature in their settings to opt-out of sharing [...]