NEW YORK–The volume of peer-to-peer payments continues to soar as more consumers use payments solutions to pay bills and exchange funds with one another.
The trendline is clear in data being reported by Zelle, which said that during 2024 it surpassed $1 trillion in transactions for the first time. In all, Zelle said some 151 million consumers used its network to make payments last year. Zelle is co-owned by seven of the largest banks in the U.S.
For credit unions, such P2P payments mean members often go outside their CU to make transactions, leading to loss of card interchange income, although numerous credit unions do offer Zelle to members.
As Inc. noted in a recent analysis of the Zelle data, there remain some hurdles for customers who want to use Zelle to pay for goods or services, as they must do their banking at one of the app’s partner banks—and they can’t tie a credit card to their Zelle account. Small businesses do not have to use the same bank as the customer, but their financial institution will also need to be part of the Zelle network.
According to Early Warning Services, the company that operates Zelle and which is owned by the seven banks, the network now has more than 2,200 financial institutions in its network, the vast majority of which are community banks and credit unions.
The Specifics
Specifically, Zelle said:
- Nearly one in four Zelle users—approximately 23 million people—sent a payment to a small business during Q4 of 2024.
- The number of transactions to small-business owners increased 32% in 2024 over 2023.
- A total of 500 million Zelle transactions brought in $283 billion, which is a 32% dollar increase.
The other dominant brand in P2P, PayPal, which acquired Venmo more than a decade ago, said its total P2P payment volume in 2024 topped $400 billion.
Consumer Usage
Overall, 60% of Americans said they have used the payments apps for their bills, according to a report from Pymnts Intelligence, with Millennials and Gen Z being the biggest users of such services. The report found 53% of consumers aged 18-25 and half of those aged 26-41 use P2P apps more frequently than other payment methods.
But there has also been satisfaction with those services. Pymnts Intelligence said it found 70% of users have experienced “friction when paying bills via mobile wallets,” and one-quarter of users cited security and authentication as their primary frustrations.
Zelle has been a popular target for scammers, and some credit unions have found themselves in litigation as a result.
Consumer Misunderstanding
There has also been some misunderstanding by consumers over whether their deposits stored on the payments apps are insured—they are not. They also often pay no or very low interest.
In 2024 the Consumer Finance Protection Bureau issued guidance on best practices to avoid losing funds or interest. The CFPB has reminded that while funds stored on payment apps resemble funds stored on deposit accounts, those funds are not typically covered until they have been transferred back to an FDIC-insured bank or NCUSIF-insured credit union.