Why Zelle and others won’t be a Venmo-killer

There is Venmo, Zelle, Facebook messenger, Snapcash, Square Cash, PayPal, Western Union, and now even Apple is getting into the p2p payment space.

Banks, messengers and startups are all vying for the elusive digital person to person money transfer market.

So what is the strategy to separate from the pack and win? From the looks of it so far, not much. Industry players are currently trying to compete with virtually no differentiation — all have the same bill splitting, request money and send money features. Venmo has had huge success with their social feed, but from a product point of view, it is only the beginning of what should be done. Digital money transfer has emerged out of the gate as a transactional, undifferentiated experience.

With the US market size projected to grow to over 200 billion in 2020, there is a lot at stake for the winners. So what is the strategy to win?

Instead of thinking of digital money transfer as only a transaction, there is an untapped opportunity to evolve it into a communication platform that lets people interact and express themselves.

So if we treat money transfer like a communication tool, say like Snapchat, many principles can be applied that open a big vision ahead like building new social experiences on top of the basic money transfer.

Personalization because there’s always something more to say beyond the cash.

Personalization tools like audio, video, stickers, filters, bitmoji and gifs combined with great design help you amplify your chat. Money transfer is no different: There is a big opportunity to give users new digital tools to turn their money transfer into the message itself. For example, paying your friend back for a big night out could include a pic of the epic burger you had, a Youtube video of the song that played at the end of the night and even a calendar invite to do it all again next weekend. Money transfer can give people another avenue to be social and to express the hundreds of emotions and reasons they send cash.

Context drives adoption & transactions

Context also uncovers another big opportunity to motivate people to transact — Birthdays, graduations, congratulations, thank-you’s, Mother’s day, even fun occasions like National Ice Cream Day. In Asia for example, contexting digital money transfers during the lunar new year drove billions of transactions, dwarfing in just a few days what Paypal does in a year.

Social and Fun prevents losing customers to competitors.

Another overlooked opportunity is to weave in social engagement & fun. Using money transfer to interact with friends can make the service sticky and less likely that users will turn to a competitor. For example, asking for a fun selfie from your friend to redeem their digital money transfer, or inviting your family to contribute to fund a big trip for a sibling. These interactions allow people to naturally engage with each other around the money transfer event.

Innovation can introduce new behaviours and experiences.

There is a lot of room to innovate and create new experiences beyond the transaction itself and to ultimately create the concept of ‘money as a message’. Would you send your child money and geo-lock it at Grandma’s house to spark a visit, at an ice-cream store to reward them for a good grade, or in the park to get them out of the house? Encourage a friend who is on a new workout regime to send you a video of them doing 20 pushups to get their cash? We have seen similar ideas on WeChat that caused explosive growth. Creating new experiences for customers could be one of the biggest growth opportunities in the money transfer space.

As basic money transfer is becoming a commodity offered by many players, the industry needs to adapt. The industry can no longer be run by just bankers, it needs the influence and creativity of people from different domains such as mobile gaming to apply their learnings and pave the way for the next evolution of money transfer. Whoever succeeds at building new social experiences will separate from the pack and have a chance to win the loyalty of both millennials and the mainstream.