As payments platforms such as Square's Cash and PayPal's Venmo continue to grab their slice of the global payments pie, bank-owned payment network Zelle says it's not worried about potential market saturation.
Zelle, which is owned by a consortium of seven U.S. banks, including JPMorgan Chase, Bank of America and Wells Fargo, has seen year-over-year growth in its payments value and its number of transactions.
The platform's payments value grew 56% to $44 billion during the quarter ending June 30, while its number of transactions rose 71% to 171 million, according to a release.
Both figures represent a slight decrease from Zelle's growth the previous year, which saw increases of 62% for payments value and 77% for number of transactions. However, Jamie Armistead, business line leader at Early Warning Services, which owns and operates Zelle's platform, said he thinks there's plenty of room left to expand in the payments market.
"There are 11,000 financial institutions in the United States," he told Banking Dive. "As excited as we are about having over 500 signed on, we're in the early stages of this thing. So, I don't think we'll be experiencing any sort of market saturation for quite some time."
More than 200 banks use the platform, with around 300 in the platform's "backlog," going through the onboarding process, Armistead said.
Transaction growth is outpacing transaction volume, an indication that customers are increasing their engagement with the platform, Armistead said.
"We're seeing really strong market receptivity to it. And so by virtue of onboarding new financial institutions, new clients and new customers, you're going to just see your transactions go up. We're seeing those existing customers continue to increase their utilization of Zelle," he added.
As the payments market heats up, other services are sharing their growth. Venmo revealed in April that it had 40 million users. Square said the following month that its Cash app grew to 14 million users in 2018. Early Warning Services said it doesn't release user numbers.
As the consumer appetite for fast and fee-free payments grows, a report by Accenture shows just how crucial it is that banks invest in payment technology.
Financial institutions stand to lose as much as 15%, or $280 billion, of their global payments revenue to digital payment companies and nonbanks by 2025, the study found.
With global payments revenue expected to grow 5.5% annually, from $1.5 trillion in 2019 to more than $2 trillion by 2025, the study found that banks will face further pressure on income from card transactions and fees in the next six years, with fee-free payments expected to threaten 8% of payments revenue.