Article: Zelle records explosive Q2 growth but faces tight competition from peer-to-peer payments rivals.

A diverse ecosystem means each bank has its own rules governing Zelle transfers. This could hinder development, slow implementation, and limit uptake of emerging features by complicating rollout, since not all banks will offer the same Zelle services. Zelle will continue to expand user numbers and transaction share but could be constrained by its limited ecosystem.

In the US, 37% of adults don’t use mobile payment systems, but among those who do, one has a commanding lead: 39% of US adults use PayPal, while only 15% use rival Venmo and even fewer (12%) use Zelle. More like this:. Article: PayPal achieves record volume in Q1 and reveals plans for super app. Article: Zelle’s small-business transaction volume surged 180% in Q1, aiding overall business growth.

P2P’s steady ascent from 82.5 million users in 2020 to 101.8 million in 2024 will be supported by millennial demand—and Zelle will be a beneficiary. Insider Intelligence projects that in 2024, 48.6% of those P2P users will use Zelle, up from 46.5% today.

Last year alone, Zelle added 457 new financial institutions to its network, including a number of small banks and credit unions through a partnership with Fiserv. As noted in our recent report “The Payments Ecosystem,” consumers turn to Zelle for bill paying and larger transactions.

Bank of America customer spending on credit and debit cards and over the Zelle network is 20% higher than the same period in 2019, CEO Brian Moynihan said on CNBC’s Squawk Box. All spending categories with the exception of travel—which still remains as much as 15% lower than 2019—have recovered from the spending declines experienced last year, according to Moynihan.

This could help drive more volume growth for Zelle since small businesses’ appetite for digital payment tools will likely stick around for a while. It’s also worth noting that small businesses make up more than 95% of all businesses in the US—giving Zelle a large addressable market to work with.

Peer-to-peer (P2P) payments are increasing significantly in the US, driven by tremendous growth from Venmo and Zelle. eMarketer’s latest estimates show that P2P mobile transactions will total $309.95 billion this year, growing 27.9% to hit $396.48 billion in 2020.

eMarketer junior forecasting analyst Brian Lau shares our estimates for peer-to-peer mobile transactions and usage in the US, as well as why apps like Venmo and Zelle are strong market players.

However, digital fraud has also affected other digital payment channels: Venmo, PayPal’s peer-to-peer (P2P) payment service; Zelle; and Square’s Cash App have struggled with digital fraud as consumers fall victim to elaborate schemes that are difficult for providers to pick up on. PayPal’s fraud management tools can help maintain merchant relationships by minimizing their financial risk.

Apps like Venmo, Zelle, and Square Cash have grown in popularity, with volume hitting $393.87 billion on the back of massive user growth in 2020, according to Insider Intelligence estimates.