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Despite posting significant gains in dollar and transaction volume in the first quarter, Zelle, the fast-growing peer-to-peer network operated by Early Warning Services LLC, says it has just begun to mine P2P payments’ growth potential.
Earlier this week, Zelle announced $106 billion was sent through its network on 392 million transactions, representing year-over-year increases of 74% and 61%, respectively. Transactions through Zelle’s small business accounts increased 180% over the same period in 2020. Zelle is not disclosing dollar or transaction volume for small business transactions.
The substantial growth is attributable to a couple of factors. Consumers have been looking for contactless ways to pay family members, neighbors, and landlords since the pandemic began. Equally as important is that, as the economy begins to open up, consumers are returning to old payment habits that were kicked to the curb at the height of the pandemic, such as splitting a restaurant check.
“We have seen a boost from consumers using Zelle as a result of the pandemic, but we have also seen a return of transactions that were displaced when the economy began to shut down,” says Lou Anne Alexander, chief product officer for Early Warning.
With the economy reopening and with Covid vaccines becoming widely available, Alexander predicts Zelle will continue to see robust growth as consumers have become more comfortable with P2P payments.
“There are probably 9 billion or more P2P transactions to be had,” Alexander says. “Many of these transactions are cash or check [that can be displaced by P2P]. We’re just scratching the surface.”
On the small-business side of the market, Alexander says a variety of merchants that provide in-home services are adopting Zelle as a way to receive payment that’s not only contactless but also faster than if they were paid by check. Services providers accepting Zelle include physical therapists, tutors, and tradesmen. Currently, 12 financial institutions offer Zelle to their small-business clients.
To attract more consumers and make them comfortable with sending payments via a P2P network, Zelle is focusing on consumer education. The network’s partnership with EVERFI—a social-impact education technology company—has enabled the network to reach more than 39,000 students in 47 states about the safety of P2P and digital payments, for example.
In addition, Zelle recently partnered with The Cybercrime Support Network to spread awareness and educate consumers and small businesses on avoiding financial fraud and scams. While consumers trust their financial institutions, which serve as their conduits to Zelle, Alexander says they still need to be educated about criminals trying to trick them into using Zelle to send them money. Nearly 8,000 financial institutions participate in the Zelle network.
“Our financial-literacy programs are intended to help consumers identify potential scams,” Alexander adds.
Looking ahead, Alexander sees growth opportunities in bill pay and real-time payments. In February, Zelle announced payments can be cleared and settled on the Real Time Payments network, owned by The Clearing House Payments Co. LLC. “We don’t think growth will slow,” Alexander says. “Consumers are seeing the safety and convenience of paying by Zelle.”
