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Paying by smartphone is now routine for a growing number of consumers, both in stores and online. Recent data shows the size of the user base, shifting demographics, shopper preferences, and how mobile fits into the spectrum of payment options.鈥�

Real-time banking services like Venmo, Zelle, and Google Pay for instant payments and updates. Budgeting tools and AI-powered finance management within their banking apps for seamless financial planning. Access to information like free credit scores in their apps, so they don鈥檛 have to search and potentially pay elsewhere for valuable information.

The agency has since dropped at least half a dozen legal cases started by Chopra, including a lawsuit against Zelle-owner Early Warning Services. And the House Financial Services Committee approved a resolution this week to block the CFPB鈥檚 overdraft fee rule.

The Consumer Financial Protection Bureau (CFPB) sued Zelle-owner Early Warning Services (EWS) and three of its consortium banks, claiming they failed to protect Zelle users from fraud. The suit may not go anywhere given all CFPB operations have been halted, but it shines a light on Zelle鈥檚 continual fraud (whether overstated or not). Zelle has said that only 0.05% of Zelle transactions are fraudulent.

The CFPB sued Early Warning Services (EWS) and three of its owner banks in January, claiming they failed to protect consumers from fraud on Zelle. The agency also ordered Block to pay $175 million over what it claims was a failure to protect Cash App customers from fraud. Our take: We knew the CFPB鈥檚 recent rulemaking and other initiatives would be overhauled once Trump.

In addition to trust issues, X Money will have to compete in a highly saturated market where consumers are already loyal to their preferred platforms, like Venmo, Zelle, and Cash App. This article is part of 蘑菇AV鈥檚 client-only subscription Briefings鈥攄aily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends.

Our take: This enforcement action offers Block and Cash App closure on the CFPB鈥檚 investigation鈥攗nlike its peer-to-peer (P2P) payment competitor Zelle, which faces a CFPB lawsuit over its own fraud prevention practices.

The big three have succeeded in part by carving out their own niches: Zelle is typically used for higher value payments thanks to its bank backing; Venmo is popular among younger consumers for its cost-splitting; and Cash App markets itself as a bank and is popular among crypto users.

The bigger picture: This is not the first time Zelle has been under fire for its fraud prevention practices. The Securities and Exchange Commission (SEC) looked into JPMorgan鈥檚 Zelle complaint process in February and Wells Fargo鈥檚 in May. And in 2023, Democratic senators asked regulators to strengthen consumer protections against Zelle.

Innovation road maps should center on what Gen Z wants, such as Zelle and young adult debit cards. They鈥檙e also looking for innovation in credit card apps, budgeting tools, and QR codes. Promote the history and purpose of credit unions and community banks.

Gen Z has also embraced Zelle, as the bank-owned app keeps building a bigger share of peer-to-peer (P2P) transaction value and usage. Gen Z will also propel in-store mobile wallet usage.The number of Gen Z mobile proximity payment users will rise from 32.8 million in 2024 to 50.0 million in 2028, per our forecast鈥攚hich will represent 37.7% of overall users.

The Paze digital wallet鈥攚hich is backed by Zelle operator Early Warning Services鈥攊s slated for a Q1 US 2024 launch. While it鈥檚 late to a game dominated by Apple Pay, PayPal, and Venmo, Paze will quickly build a foundation that poses a threat. Onboarding is backed by bank issuers. Paze can access over 150 million consumer credit and debit cards held by the seven banks that own it.

But these users are already loyal to their preferred P2P app, with the industry dominated by Venmo, PayPal, Zelle, and Cash App. And feature innovation in digital wallets is making consumers even more attached to their preferred wallet. For example, new features like PayPal鈥檚 digital smart receipts and package tracking create more use cases for the app, boosting user loyalty.

Paze can scale further by building relationships with the 2,000-plus FIs that now use Zelle. Checkout is seamless, secure, and personalized. Users鈥� cards are saved as network tokens鈥攅nhancing security鈥攁nd card numbers are autofilled for them. Paze shows users their preferred credit cards first, but also recommends other payment options that help maximize card benefits. Prediction.

Four banks that partnered with payments app Zelle reported that losses to P2P payment fraud on the app likely exceeded $255 million last year, soaring from $90 million in 2020, per a report by Sen. Elizabeth Warren. P2P payments platforms Cash App and Venmo are also under fire over fraud concerns.

Zelle and Venmo operate in the same space and dwarf Cash App by P2P transaction value, per Insider Intelligence forecasts. Venmo has also expanded its features, although it appears to be targeting younger users. Making users view Cash App more like a bank will be exceedingly hard. Even with new services and a more established brand, reputational change will take time and meaningful investment.

Zelle. US mobile peer-to-peer (P2P) payments transaction value will grow 11.3% by the end of 2023 to reach $993.28 billion, per our April 2023 forecast. Zelle, with $485.32 billion in P2P transaction value, makes up nearly half (48.9%) of that number. Though Zelle has some reputational issues associated with fraud, it鈥檚 still the market leader in P2P payments.

The disconnect: Here are the features Gen Zers prioritize when evaluating financial institutions (FIs):. 25% want their CU to offer Zelle, but over 40% of CUs surveyed have no plans to offer it by 2030. 20% of Gen Zers want their FI to debit cards tailored to young adults and teens, but a whopping 85% of CUs have no plans to offer such cards by 2030. 34% want their CUs to offer a mobile credit card app,