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JP Morgan, Bank of America join forces to take down Venmo

A collection of the biggest names in American banking, including JP Morgan Chase, Bank of America and Wells Fargo are all partnering to add integration with a new mobile payments network called Zelle, competing with the dominant force in the industry, Venmo.

The network, created by a company called Early Warning, is an effort by the banking sector to create a payments system that rivals the popular Venmo as the premiere way to share money. The network will also be integrated with a number of banking partners’ first-party mobile applications.

“The goal of Zelle is to offer consumers a consistent, easy, quick and secure experience to send and receive payments with each other,” said Andrew Tilbury, senior marketing strategist for Early Warning.
The larger the network, the greater the value to consumers who are looking for faster, secure ways to send and receive money with anyone in their lives.

“On the business side, the goal is to partner with banks and credit unions of all sizes to make the consistent user experience offered through Zelle increasingly accessible.” 

Venmo challenger

The current market for money sharing apps, particularly from consumer to consumer is dominated by Venmo.

The startup, which is owned by PayPal, originated from the tech world and has controlled the field of consumer-facing money sharing. Zelle is seeking to bring some of that money sharing business back to banks who have been left out since the rise of Venmo.

Zelle users will have two options, depending on what bank they use, when deciding how to send and receive money. If users do not belong to a bank that has partnered with Zelle, they can simply use the Zelle mobile app and send money through it.

Anyone with a valid checkings or savings account, regardless of what bank that account comes from, will be able to use the Zelle app.

If they do belong to one of those banks who have partnered with the new app, they can find a ZellePay option integrated into their bank’s mobile app, allowing them to send money directly to and from their bank account, without having to have their money wait in limbo on Venmo’s or other payment app’s networks.

Considering the banks that have partnered, many Americans should not have trouble finding Zelle on their bank’s app. Banks such as JP Morgan Chase, Bank of America and Wells Fargo will all be integrating Zelle into their mobile apps.

Other partnering banks include PNC, Citibank and U.S. Bank, as well as a host of other smaller financial institutions.

Zelle is also partnering with a variety of payment providers and credit card companies, including Mastercard and Visa, to provide consumers with a range of options for using Zelle and financial companies many ways to connect with consumers.

As popular as Venmo is, it has met some resistance from users who are uncomfortable with the idea that their money is being from their bank account funneled into a Venmo account, then transferred to a friend’s Venmo account, which can finally be deposited into that friend’s bank account.

For many, this amount of separation from bank account to bank account and the multiple steps that come between the two can be an uncomfortable experience. A Gizmodo editorial from earlier this year voiced this concern strongly (see story).

Zelle solves this problem by connecting users’ bank accounts directly to the bank accounts of the friends they are trying to share money with. This is accomplished through Zelle’s comprehensive partnership with a wide variety of popular banks and financial services.

Early Warning and Zelle are trying to cut out the middle man when it comes to sharing payments in the hopes that banks can get a cut of the prime market of mobile money sharing, which has taken off in the wake of Venmo and its similar competitors such as Google Wallet and Square Cash.

“Since Zelle is offered by and embedded within financial institutions, there are no 3rd party stored value amounts, no inputting sensitive login information into 3rd party apps, and no waiting for your money to transfer into your account,” Mr. Tillbury said.