When it comes to peer-to-peer payments, Venmo has a big enough market presence to become a verb (“I’ll Venmo you the money I owe you right now”). With $17.6 billion in payments processed in 2016, Venmo is the largest player in an increasingly competitive P2P digital payments ecosystem. Despite this early lead, new entrant Zelle believes the market for P2P payments is far from mature.
In news reports covering the Zelle introduction earlier this year, many called Zelle’s launch a “war on Venmo,” or a “Venmo killer.” But, is Zelle really going after the Millennial market segment that is already accustomed to ‘Venmoing’, or are banks trying to reach the mass market – including older customers who may just be learning about digital payments?
The foundation of Zelle isn’t new. It is, in fact, a re-branding of the bank-owned clearXchange peer-to-peer payments network, run by Early Warning. The network allows customers of participating banks and credit unions to make instant payments to each other, and through partnerships with payment processors, Visa and Mastercard. Given that the existing P2P services from partner banks roll into the Zelle brand, the product has an established user base (and inflated growth numbers when measuring ‘brand’ penetration).
Marketing to P2P Users and Non-Users
Zelle officially launched in June and is in the early stages of brand awareness and market penetration. According to reports, Zelle’s marketing strategy is to focus on a consistent branding of Zelle, emphasizing security and the speed of payments using a trusted source — rather than the social element which differentiates Venmo. At this time, Zelle has 35 member banks, including Bank of America, Capital One, Chase and Citibank.
“When we talk about Zelle, it’s about a target market that ranges from 18 to 54,” said Jeremiah Glodoveza, VP of communications at Early Warning. “When we did our research, social sharing appealed to a subset of the marketplace, but what we’re really optimizing is for an ubiquitous experience, and that’s why some of that functionality wasn’t prioritized.”
According to an excellent review of financial services partners promoting their involvement in the Zelle peer-to-peer payments service from Mintel Comperemedia, marketing around Zelle is still limited, with Bank of America sending the most emails about the service post launch. US Bank, Wells Fargo, and Chase also have used email to introduce Zelle, with Capital One being the only organization monitored that has used direct mail. Bank of America was the only bank observed to discuss Zelle on social media.
Direct Mail Marketing of Zelle
According to Mintel Comperemedia, Capital One is the only organization to use traditional direct mail to market the Zelle product. Approximately 773K of these customer communication pieces were sent to Capital One 360 Checking account holders in June 2017.
Email Marketing of Zelle
As part of the transition from previous P2P payment systems to Zelle, organizations such as Capital One, Chase and others used email to announce the new product to customers who had used P2P payments previously.
To introduce the new Zelle product as part of their mobile banking application, Bank of America targeted students as well as previous P2P customers. They also test alternative email headers with varied visuals and copy.
Similar to Bank of America, U,S. Bank introduced Zelle as part of an enhanced mobile banking experience. Most of the larger banks have supported this introduction with marketing within their mobile app as well.
As a heavy promoter of the Sure Pay product, Wells Fargo provided advanced warning to its best customers about the conversion from Sure Pay to Zelle. Wells Fargo also ran an introduction of Zelle in June.
Social Media Marketing of Zelle
Bank of America was the only institution that introduced Zelle on Social Media (the primary channel used by Venmo). It is expected that most of the largest organizations will eventually leverage social media to support other marketing channels.
Can Marketing Change Existing Habits?
The peer-to-peer money transfer market is very competitive. Square Cash, PayPal, Venmo and even PopMoney create serious hurdles for any new player. Zelle’s strength — its ties to big banks — may help those consumers that do not trust non-banks to handle their payments. Obviously, this market is also less likely to already be using digital payments.
While current Zelle banks can shift current P2P payment customers to the Zelle brand, this may only be a horse of a different brand and not create incremental usage. The bank partners can also leverage existing mobile banking loyalty, integrating the Zelle app within the mobile banking platform.
The questions is whether marketing of Zelle will move market share and increase acceptance of the new brand. Competition between Venmo and Zelle will likely come down to extra features and functionality, as the act of “sending money to anyone” is now table stakes, states Mintel Comperemedia.
“This is bigger than peer-to-peer payments,” said Bob Meara, senior analyst at Celent. “Every time Paypal or Square or Venmo takes a customer interaction away from a bank, that’s engagement a bank doesn’t have with its customers. If banks can keep their users engaged, then they have more of an opportunity to cement relationships with customers while providing a broader array of services.”