It could be that banking is about to take a major and disruptive step toward digital, but how are digital transactors supposed to catch on to Zelle without a prior marketing campaign?
Though it was in August of 2016 that the Wall Street Journal first broke word of the banks’ coming “Venmo-killer,” spasmodic coverage by a few publications in August and October has slackened to total media silence in the time since.
My own cursory quizzing of colleagues and tech-savvy friends on the existence of Zelle mostly confirms what one might expect: no one has heard of this thing.
As advertising in American banking goes, Zelle’s understated introduction to the world is a definite departure from the norm; JPMorganChase, promoting a payment feature much like Zelle, though exclusively for Chase customers, launched a sweepstakes to promote awareness, while Bank of America takes care to promote the updates to its mobile app with large red letters on the BoA homepage.
As TechCrunch reported in October, the current list of banks enrolled in the Zelle program includes the United States’ four largest – JP Morgan Chase, Bank of America, Wells Fargo and Citigroup – as well as Ally Bank, BB&T, BECU, Capital One, Fifth Third Bank, FirstBank, First Tech Federal Credit Union, Frost Bank, Morgan Stanley, PNC, USAA, and U.S. Bank.
That’s an impressive lineup!
But more importantly, most Venmo users don’t know why Venmo needs fixing. As it happens, the near ubiquitous app has two major security problems:
Venmo is an app, and apps live on phones. Because users often leave themselves logged into Venmo, fortunate phone thieves sometimes find themselves in possession of more than just an expensive device.
Worse still, Venmo users who connect their credit cards, debit cards and/or routing numbers to the app may find themselves robbed of larger sums than just their Venmo balances.
Cases like that of Chris Grey, a New York web developer who discovered the theft of $2,850 from his routing number-linked Venmo account, should give pause to those looking for easier ways to transact from their mobile phones.
The bogus check method
As others have pointed out, Venmo is not instantaneous, though it would like you to believe that it is.
Its “so-and-so has paid you x for y” message leads many to believe that transactions performed through the app move money the moment a user presses the pay button. In fact, Venmo transactions take a couple of days to process, and are therefore more similar to checks than to QuickPay systems like the one Chase bank provides its customers for intra-bank use.
Taking advantage of this common misunderstanding of Venmo’s operating procedure, fraudsters cheat vendors the same way one would with a bogus check.
The practice of “paying” for a service, receiving the service, and then cancelling payment before the transaction can be processed is the reason Venmo encourages users to limit their use of the app to transferring funds between friends, relatives, and trusted acquiantances.
What Zelle’s pitch should be
By being a non third-party service, Zelle largely solves the former problem, and by being truly instantaneous in its transactions, completely solves the latter. It’s hard to see how adopting Zelle wouldn’t be a good idea.
This makes the decision by Zelle’s backers not to inform the public of Venmo’s flaws through an information campaign an odd one. The PayPal-owned app already defends itself from a position of strength, enjoying a good amount of brand loyalty from its users, as Fortune points out.
Furthermore, Venmo’s customer base is millennial. Even without millennial antipathy to the banking sector, the 18-40 year old market is notoriously tough to win over.
Digital marketers, take note – it will be an instruction to watch how this banking alliance tackles a tough set of marketing problems after a bad start.