But the other, even more lucrative aspect of becoming merchants’ preferred means of payment is access to information about where customers are spending their money. “The real value is in the data, and the ability to render customized ads and offers, and generate a revenue stream from that,” Crone says. “We estimate that the value of mobile payments per enrolled active account is worth more than $400 per year in revenue, to whoever does it—Venmo, Apple Pay, Android Pay, Samsung Pay, a bank, Visa, or Mastercard."
If Venmo or another service were to gain access to this payment data, the typical recipients of it would start missing out. Even though digital-payments apps are built on top of banks’ infrastructure, banks wouldn’t see the details of consumers’ spending, but instead just requests from an app to add or withdraw money from an account. Referring to the value of owning the platform that consumers directly interact with, Crone says, “The one who enrolls is the one who controls”—a phrase he went on to repeat five times in one conversation I had with him.
Crone thinks that banks are worried about Venmo’s ambitions. Banks have rightly recognized that convenience, affordability, and ease of use are not characteristics that appeal uniquely to 20-somethings, and so they have in recent years collaborated on a payment platform that does more or less what Venmo does. The product of that collaboration, called Zelle, began showing up last month on the screens of tens of millions of Americans who use mobile-banking apps on their phones.
Zelle differs from Venmo in three important ways. The first is that Zelle appears within users’ banking apps, as opposed to being an app all its own. The second is a consequence of the first: Because Zelle was developed by banks and appears in their apps, transfers will register in users’ bank accounts in minutes, whereas with Venmo, that currently takes days. (Zelle’s association with banks is also a selling point when it comes to security, which Venmo has in the past gotten some bad publicity for, but has since seemed to have gotten under control.) Third, Zelle lacks Venmo’s performative social component.
And, technically speaking, Zelle is not new—the name and the bright purple buttons reading “Send,” “Request,” and “Split” are just the consistent branding given to a payments platform called clearXchange that banks have been using, under other names, for years. In fact, last year, clearXchange processed about $175 million in payments per day, while Venmo’s daily rate was only $54 million. Still, the pre-Zelle clearXchange, which wasn’t given a consistent name or look across banks, left room for more-intuitive apps like Venmo to claim a chunk of the market. They had plenty of time to do that, given how long it took for more than 30 banks, normally in competition with each other, to cooperate and release a cohesive product.