Simply put, and to save you time scanning the article for the answer, the reason big banks will adopt Zelle instead of Venmo is because they developed and own Zelle. Paypal owns Braintree, that owns Venmo. Paypal and Zelle are from the same mindset of decentralizing banks and removing them from the middle of the transaction. In essence, both PayPal and Venmo are making the same statement, though it’s not as loud these days as most of us have adopted their platforms without necessarily taking a political stance for years, which is that the way most financial transactions, from large stock purchases to mortgages all the way down to small ATM withdrawals go through big banks. Those big banks control the market on pricing, and it isn’t cheap. They hold much of the world’s wealth, cheated many out of their savings in multiple financial scandals, and pull tons of dollars out of the world economy without adding a single physical detail of their existence to the world, besides the actual banks themselves, which very few people even step foot in these days.
When PayPal, and all its various competitors came along, the first reaction was to ignore it. It is a small thing, unlikely to amount to much, as this internet thing is a fad. Then it was to fight it. Not let traditional banking interact with these platforms. Soon after that, the smaller banks got wise and started playing ball, after all this money had to originate from somewhere, and then all other banks fell in line eventually. PayPal was used to transfer money for small transactions, but it wasn’t replacing the mortgage or bonds or futures. All was well and good. PayPal just allowed people to transfer dollars to each other and a decent amount of ecommerce, but money was still moving through the banks all the same.
Then came Apple Pay. Now credit cards, many of them underwritten by large banks, were being cut out of some transactions. Not even that many, all things considered, but enough to show the big banks that these nicks and cuts could lead to a lot down the road if they didn’t get into the game.
Venmo had been out there for a while as well, and money was floating around without a home, person to person, and into Apple accounts, growing stronger in familiarity, making cash less necessary, banks less necessary—except in origination—and it was easy to see that it wouldn’t be long before paychecks were deposited straight into Venmo accounts, landlords and mortgage companies would be accepting Venmo payments, as well as restaurants, gyms, grocery stores, mechanics, coffee shops, on down the road until future generations not only never stepped inside a bank but they would seem like payphones to them: only something to ironically take a photo in front of and laugh at.
So now we have Zelle. It doesn’t have a big user-base yet, but it will. It will be aimed at older millennials and younger Gen X. Basically, those young enough to understand, but thus far resistant to Venmo for what their reasons. You will see it show up in small local banks like Rhinebeck Bank in Hudson Valley New York. It is owned by the banks Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, Citibank and Wells Fargo , and while they are VERY out of touch with what people want or need, they have so much leverage and financial real estate that it will be a force to be dealt with and will have a lot of market share no matter where the market turns.
In this world of intertia loyalty, where we remain loyal to companies and brands mainly because it is seemingly such a heavy lift to change—especially change something where so many accounts are tied in—our view is to pick the winning horse, for better or worse. Going with Zelle may save you a lot of time in the long run. Hopefully, the rest of the world can force the market to make these transactions free for as long as possible.