More than 70 percent of people surveyed recently think that children now under age 10 won’t be writing any checks to pay their debts when they grow up—even when the folks they owe are close friends or family members.
It’s not that the majority in that poll believe we’re raising a generation of deadbeats or severely impoverished people. Instead, they think kids not yet 10 will never learn how to write checks, because those paper oblongs will be replaced by mobile transactions including person-to-person payments, according to the results of a survey commissioned by Bank of America.
That’s one gauge of the pace of adoption expected for person-to-person, or P2P payments—the quick way millennials and other adults are chipping in their share of a restaurant tab, for example, just by pulling out their smartphones at the table. Bank of America has a close interest in the rise of this method, as one of the 20 banks that have agreed to adopt the Zelle app to facilitate the transfer of funds directly from one person’s bank account to another’s.
To repay a friend, Zelle users can just select an e-mail address or cell phone number from their smartphone contacts list. “You put in an amount, and off you go,” B of A payments strategy executive Mary Harman says.
Wells Fargo, Chase, and U.S. Bank are among the other banks and credit unions that have joined the Zelle Network, which is coordinated by fintech company Early Warning Services. The partnership is developing Zelle as a means to compete with the established P2P app Venmo, operated by PayPal.
But will all those adopters of Venmo, founded in 2009, switch over to Zelle? Venmo handled $17.6 billion in transactions in 2016, up 135 percent compared with 2015, Bloomberg reported in February.
Bank of America implemented the Zelle app in February, with two main goals. First, the bank is always looking to improve its mobile banking offerings, Harman says. Second, P2P payments can replace cash, checks and other paper formats that cost the bank money. Those costs range from stocking ATM machines with cash to operating teller windows, she says.
What’s more, she says, “There’s still a lot of bank robberies.”
Before joining the Zelle Network, B of A launched a predecessor P2P app called clearXchange, operated by Early Warning, five years ago. The bank moved $8 billion through its existing P2P channels in the first quarter of 2017, Harman says. The bank’s hope is that Zelle will attract broader participation in mobile P2P transactions.
Javelin Strategy & Research clocked nearly $500 billion in P2P transactions in 2016, concluding that more than a third of U.S. consumers used the P2P payment route last year with a mobile device or other online connection. In the same report in February, Javelin predicts that by 2021, half of American consumers, or 129 million people, will have used a P2P service.
Bank of America sees that conversion well on its way in the…