Reports Show How Fast P2P Payments Are Growing for Bank And Nonbank Providers

Long an afterthought in payments, peer-to-peer transfers are top-of-mind in the industry just now, and this week three reports emerged to show just how fast the payment type is growing for bank and nonbank networks alike.

The bank-owned Zelle network processed 100 million transactions totaling $28 billion in the three months ended June 30, according to Early Warning Services LLC, the network’s operator. Those results represent increases of 17% and 11% respectively, Early Warning said in a report released Thursday.

Further and faster growth is likely. Twenty-nine financial institutions are now live on the network, and 119 more are under contract, the company reported. All told, these banks control 56% of U.S. demand-deposit accounts.  Zelle, which officially debuted in June 2017 but is the rebirth of a previous, less successful service called clearXchange, has also recruited so-called core processors to support network links for banks, including Co-Op Financial Services, Fidelity National Information Services Inc. (FIS), Fiserv Inc., and Jack Henry & Associates.

“In a phenomenal year for the banking industry, consumers have embraced Zelle as a fast, safe, and easy way to send money digitally,” said Early Warning chief executive Paul Finch, in a statement. Finch announced in May that he will retire next year.

With these results, Zelle is now well ahead of its chief nonbank rival, PayPal Holdings Inc.’s Venmo service. Still, Venmo continues to rack up impressive results. PayPal reported this week the service posted $14.2 billion in payment volume for the June quarter, up 78% over the same period last year. That may now be well behind Zelle’s volume, but Venmo isn’t PayPal’s only P2P play. It also offers transfers through its core PayPal service (which was the service the company started out with in 1998), and through Xoom, the digital-remittance platform it acquired in November 2015. Combined volume for these three services came to $33.4 billion in the June quarter, PayPal says.

The companies behind these P2P services are tightlipped about active user counts, but estimates from New York City-based researcher eMarketer project Zelle will reach 27.4 million active customers by the end of the year, up from 15.8 million in December 2017. The estimates for Venmo are 22.9 million by year’s end, up from 17.3 million a year earlier.

Also this week, NACHA released statistics indicating P2P transactions totaled 29.4 million on the automated clearing house network in the second quarter, a 24.1% increase year-over-year. That’s also a 14% rise just since the end of 2017.

The ACH links virtually every bank in the country, but NACHA statistics don’t include so-called on-us transactions, which are transfers handled between two customers of the same bank. NACHA is the governing body for the ACH network.