When corporate innovation works, or how Zelle is dominating P2P payments 💸; Web3 infrastructure was hot, but few expected it to be this hot 🤯; Permissionless innovation is the future 🚀
FinTech is Eating the World, 20 February
Hey Everyone,
Happy Monday! Today’s issue is both intense and fascinating. In fact, it’s one of the most resourceful issues I’ve started a new week with 💸 We’re looking at how Zelle dominates P2P payments (& why corporate innovation can work and being a late-comer could be an advantage), Web3 infrastructure that’s having a heatwave right now (will uncover why is that & why it’s a recession-proof vertical), and understand why permissionless innovation is the future (Siemens + Polygon shows that). Let’s jump straight into the spicy stuff 🌶
P.S. We’re also going to look at Adyen that could be coming for Stripe’s lunch; what happens when you don’t prioritize compliance; and why embedded finance will explode in 2023. You can’t miss this!
When corporate innovation works, or how Zelle is dominating P2P payments 💸
The news 🗞 Bank-owned Zelle, a corporate FinTech company, just released their latest numbers. Honestly, they are rather fascinating:
Zelle now counts more than 1,800 financial institutions. 97% of FIs that joined the Zelle Network in the last year have under $10 billion in assets. That’s a growth of 40%.
Consumers and businesses sent 2.3B payments with a total value of $629B through Zelle in 2022. Transaction volumes increased by 26% year-over-year (YoY), and the total transaction value increased by 28% YoY.
More than 99.9% of payments on the network were reportedly sent without any report of fraud or scams, and the percentage continues to improve.
Small businesses are increasingly using Zelle to receive payments. They received 150 million payments totaling $72B in 2022 — figures that were up 77% and 84%, respectively, from 2021.
These businesses are also using Zelle to pay their employees and rent, having sent 133M payments totaling $87B in 2022.
Zelle moved more than $1 trillion in the past 2 years alone.
A refresher ♻️ Early Warning Services, which owns and operates Zelle, is a FinTech company owned by the seven largest banks in the US - Bank of America BAC 0.00%↑ , Capital One COF 0.00%↑, JPMorgan Chase & Co. JPM 0.00%↑, PNC Financial Services Group PNC 0.00%↑, Truist Financial TFC 0.00%↑, U.S. Bancorp USB 0.00%↑, and Wells Fargo WFC 0.00%↑. In addition to the money transfer app Zelle, Early Warning also provides identity, authentication, and payment solutions for banks, governments, and payment systems companies.
Interesting fact - Zelle started off as a platform called clearXchange. ClearXchange was a digital payment platform founded in 2011 and owned by Bank of America, JPMorgan Chase, and Wells Fargo. The platform supported payments between individuals (peer-to-peer or P2P), business-to-consumer (B2C), and government-to-consumer (G2C).
Why is this important? 🤔 In short, it shows that corporate innovation can work (even when those corporations are banks). Let’s take a closer look at Zelle’s business model, value proposition, and how it’s dominating peer-to-peer payments in the US.