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Venmo launched in 2009 by roommates at the University of Pennsylvania as a way to send money via text messages. The founders quickly launched it as an app. It grew really fast (especially after acquisition by Braintree and subsequently by Paypal) and has been really popular amongst the younger generation.
While Zelle, launched in 2017, as a collaboration between a few major banks has now 100+ banks on its service. It is embedded in the bank account and because of that had a meteoric rise in the last 3 years and has become a real competitor to Venmo.
Both of these companies have made huge splashes in the P2P transfer space, but which one is the favorite among immigrants in the U.S.?
We compared how the two companies perform among immigrants, and the results were surprising.
Table of Contents
The first angle we explored was which company was capturing a larger share of the potential immigrant users.
Because of Zelle’s advantage of being a part of the bank account, it captures a large userbase, in general. According to our data, Zelle presently has nearly two times as many immigrant users with 41.60% exclusively using the services compared to only 23.10% for Venmo. The remaining 35.40% of immigrant users in our dataset utilize both services.
Zelle is the clear winner here. They capture more immigrants than Venmo because people have to download an extra app to use Venmo while Zelle is already built into their bank account.
Next, we looked at how much money Venmo and Zelle’s immigrant users were transferring.
Zelle not only captures more immigrants, but those immigrants also transfer more money with the service. Compared to Venmo’s average spend of $148.83 for immigrants, the average Zelle transaction size on Zelle is $339.36 for immigrants.
One big reason could be because Zelle is used by many to pay rent. Most landlords have a bank account that offers Zelle and the rent is transferred instantly – which is much better than a check.
Again, Zelle is beating out Venmo by a good margin.
At a high-level, Zelle appears to be beating Venmo by healthy margins. Next, we wanted to dig deeper into the data to see how the two companies stacked up upon close inspection in areas like retention, transaction volume, and transaction frequency among immigrants.
We looked at how many immigrant users regularly use a service after their first transfer. We took a set of users and followed them over 24 months to see how many of them were still using the service at the end.
We found that Zelle is able to retain 25.83% of its immigrant users over 24 months while Venmo retains only 11.32%.
This is not a good look for Venmo. It starts with a smaller proportion of users, sees lower average transfers, and retains fewer users over time.
The retention is low for both services, but Zelle retains 2.28x as many immigrant users as Venmo.
In spite of declining immigrant users over 24 months, both Venmo and Zelle saw significant gains in the average transaction volume among those users over the same period.
During the first month, Venmo’s average transaction volume for immigrants was $548.07 per person and Zelle’s average transaction size was $3,718.90.
After 24 months – the average transaction volume per immigrant user for Zelle was 3.43x ($6,153.58 per user) and 2.22x for Venmo ($1,214.66 per user).
Both services see a higher engagement rate with immigrants who stay with them. Again, Zelle is doing better than Venmo with 1.21x greater transaction volume per user per month.
Next, we looked at how frequently immigrant users utilized Venmo and Zelle’s services each month.
At the end of the first month, Venmo’s immigrant users averaged 3.64 transactions each while Zelle users averaged 5.91 transactions each.
After 24 months, Venmo’s immigrant users averaged 7.27 transactions each (2x) and Zelle’s users averaged 17 transactions each (2.88x).
Again, both companies saw increased usage per immigrant user, in spite of declining userbases, though Zelle started the 24 month period with more transactions per user and widened the gap during that time.
Finally, we wanted to explore if one company or the other performs better with U.S. citizens than immigrants, so we looked at how Venmo and Zelle performed across immigration demographics.
Next, we looked at how well each P2P transfer service captures users across immigration statuses.
Our analysis showed that user acquisition for both companies split across immigration status.
For U.S. Citizens, Venmo captured 53% of users while Zelle captured 47%, a 6% difference. For Immigrants, Venmo captured just 31% of users while Zelle captured 69% of users, a 38% difference.
Venmo captured more U.S. Citizens (1.12x) while Zelle captured more Immigrants (2.23x).
To perform this analysis, we reviewed more than 2.5 million from between 5/12/14 and 5/19/20. This data was collected from immigrants and U.S. citizen loan applicants who applied for a loan with Stilt. For trended data, we looked at the first transaction date for users with Venmo or Zelle and track user spend for the next 24 months
Our analysis shows a clear winner — Zelle. Overall, Zelle beats out Venmo among immigrants in nearly every category:
The sole metric in which Venmo beat Zelle was in the number of U.S. Citizens who exclusively use the service (53%), but by a slim 6% margin.
Overall, it’s clear that Zelle is outperforming Venmo with immigrants at every turn.
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