#Does venmo charge a fee for free#

We regret the error.Creating a Venmo account is completely free. The invading German army easily flanked the Maginot Line, which now serves as a metaphor for a false sense of security.Ĭorrection: An earlier version of this article stated that transfers sent over the Zelle app do not occur in real time. And hiding behind a virtual Maginot Line probably isn’t going to work. The problem is that when it comes to payments, most banks really don’t have a strategy. Both DeSanctis and Crone argue that banks should accommodate a variety of payment options within their mobile apps that are linked to their debit and credit cards, just to stay relevant in the evolving payments space. And that’s how Venmo grows virally.”Įmbracing Zelle and other non-bank payments options like Venmo, Square Cash, Apple Pay Cash and Google Pay could be described as a ubiquity strategy. “It’s a marketing platform and it’s the most effective marketing out there because it’s word-of-mouth. “A social network is not about social,” says Crone. Richard Crone, CEO of Crone Consulting LLC, says banks are missing out on an important opportunity in social payments. Venmo, on the other hand, is a social payment network popular with younger generations who are among its biggest users. Zelle is also a private network (which means other people can’t see your transactions) that is marketed to all demographic groups.

So while Zelle costs its participating banks money, Venmo offers them a small revenue opportunity to offset their costs. If a bank allows its consumers to include the Venmo app in their digital wallet and prefund the account, Venmo will pay them an interchange fee on every transaction. There is, in fact, an argument to offering Zelle and Venmo, or maybe just Venmo. “Why am I better off offering a product where I’m going to pay 50 to 75 cents a transaction to move money … and also pay the fixed costs to it?”

I don’t necessarily think that’s the case,” says Tony DeSanctis, a senior director at Cornerstone Advisors. “Urgency means I immediately need to get Zelle. But P2P transaction volume has yet to build to such levels that there’s a sense of urgency for all banks to offer Zelle today, lest they find themselves at a competitive disadvantage.

#Does venmo charge a fee for free#

They offer it for free because all their competitors do, and because it’s a hassle for customers to disentangle their finances from one bank’s online bill pay service and connect with another bank’s service, which can be a disincentive to switching.įree online bill payment has become table stakes in retail banking, and P2P may go that way as well. It costs banks something to offer that service, but most banks don’t charge for it. So as Zelle’s transaction volume increases, so will each bank’s costs.Ĭharging users a transaction fee to offset that cost probably isn’t realistic since Venmo and Square Cash are free, although Venmo does charge $0.25 for instant transfers. While Zelle is both free to the user and instantaneous, it costs the participating bank between $0.50 to $0.75 per transaction. While Zelle is a weapon that banks can use to beat back Venmo and Square Cash, the third-most frequently used P2P app, it does have its drawbacks. So, if a customer’s bank belongs to the Zelle network, they are automatically a potential user. One factor that probably accounts for Zelle’s fast growth was the decision to include it in each participating bank’s mobile app. The network of banks offering Zelle has grown to 161, but is a closed system where consumers at participating banks can send personal payments-for free, and in real time-to anyone at another Zelle bank. You can think of Zelle as the banking industry’s containment strategy-just like France’s vaunted Maginot Line in World War II that was supposed to keep out the German army. to compete with Venmo, Square Cash, also known more simply as just “the Cash app,” and other up-and-coming third-party P2P services. Zelle was developed by the likes of JPMorgan Chase & Co., Bank of America Corp. Zelle, the personal payments platform developed by a consortium of large banks, is poised to become the most used P2P app by the end of the year-outpacing PayPal’s Venmo service, according to the market research company eMarketer.īut does that make Zelle a must-offer capability for the banking industry? Not necessarily.ĮMarketer projects the personal payments market to grow nearly 30 percent in 2018, to 82.5 million people-or about 40 percent of all smartphone users in the U.S.