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The news: Last week, the Consumer Financial Protection Bureau (CFPB) released the final open banking rule, which requires financial institutions (FIs), credit card issuers, and payment apps like Venmo and Apple Pay to transfer consumer financial data to other providers for free on request. Multiple banking trade groups have already launched a joint legal battle opposing it.

The key selling point, of course, is access to 400 million PayPal users, 90 million Venmo accounts, and millions of Honey users鈥攃ombined with data from 225 billion transactions across millions of merchants. PayPal is touting the ability to reach consumers throughout the entire shopping journey, along with its closed-loop attribution for advertisers, as factors that will drive success.

The rule mandates that financial institutions (FIs), credit card issuers, and payment apps like Venmo and Apple Pay must transfer consumer financial data to other providers for free on request, per the regulator. Nondepository institutions of all sizes must comply, but FIs with under $850 million in assets will be exempt.

We expect that share will be roughly flat through at least 2027, though it doesn鈥檛 include non-bank entities like Venmo and Apple that are ramping up their offerings to manage more of their customers鈥� financial lives. Gen Z is propping up gift card sales.

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.

Young consumers鈥� creativity and drive are starting to pay off, and banks should act so they can leverage their growth in savings.

It tried to encourage a number of consumer uses鈥攆rom P2P payments on Venmo to remittances on PayPal-owned Xoom鈥攂ut adoption has been slow. While it has grown to become the seventh-largest stablecoin by market cap ($694.6 million), according to CoinMarketCap, it is dwarfed by industry leaders Tether ($119.62 billion), USDC ($35.56 billion), and Dai ($5.36 billion).

Venmo offers a debit card with Mastercard that lets customers use their Venmo balance as a de facto checking account. It also added accounts for 13- to 17-year-olds鈥攇iving it a head start on solidifying financial relationships with younger customers. Venmo more than doubled its user base from 2019 to 2023. Apple Savings passed $10 billion in deposits in August, just four months post-launch.

Venmo and PayPal are already doing this. Sources. Axios. Block. Cash App. Federal Deposit Insurance Corporation (FDIC). Federal Reserve Bank of San Francisco. Hindenburg Research. LendingTree. McKinsey & Company. Morning Consult. Payments Dive. PayPal. Paze. Pew Research Center. Reuters. The Verge. United States Senate. Venmo. Visa. Zelle.

The news: PayPal-owned Venmo will launch accounts for children ages 13-17 next month, per The Verge. Venmo Teen accounts will let teens send and receive money via the app and include a debit card. Here鈥檚 how it works: Venmo Teen accounts come with parental safety controls. Parents or legal guardians sign up for the Venmo Teen account on behalf of their children.

PayPal鈥檚 share of older digital payment app users is especially higher than other apps, like Apple Pay or Venmo: 87% of Gen X respondents use PayPal, but just 16% use Apple Pay, according to the survey.

The news: PayPal and Venmo credit and debit cardholders can now add their cards to Apple Wallet, per a press release. Why it matters: PayPal outlined how expanding its relationship with Apple benefits their 鈥渕utual customers鈥� in its Q3 2022 earnings. PayPal added Apple Pay as a payment option for its Advanced Checkout in April.

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.

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.

Venmo, owned by PayPal, has continued to build out its Venmo Pay partnerships with companies like Live Nation (parent company of Ticketmaster) and Amazon. Block鈥檚 Cash App has focused on building out its in-store integrations and is now adding BNPL technology to its platform. But do any of them have what it takes to build out a super app? Apple might.

In its latest accounts for the first quarter, the peer-to-peer total payment volume (TPV) for PayPal, Venmo, and Xoom increased 2% to $91 billion, although it鈥檚 not possible to tell if Xoom contributed to growth. Why sell Xoom? PayPal has endured a challenging 2023. It embarked on major cost-cutting reforms, including laying off 7% of staff.

P2P payments platforms Cash App and Venmo are also under fire over fraud concerns. Firms can harness fraud-fighting tools: Jack Henry and other B2B payment firms can win new clients through their technology鈥檚 fraud-preventing potential. Companies that embrace this tech can bolster their reputations and attract new users who may be concerned about the risk of fraud on P2P payment apps.

Why it鈥檚 important: Mobile P2P payment providers like Venmo and Cash App will need to find new ways to boost growth if P2P payments have found a limit. They could shift their marketing to focus on other products in their mobile wallets, like their point-of-sale payments and buy now, pay later services.

Venmo recently added crypto transfers to other users and external wallets. PayPal launched this feature last year. And through a partnership with Visa+, PayPal will let Venmo and PayPal users to transact with one another later this year. Braintree. Braintree contributed greatly to PayPal鈥檚 transaction growth in Q1 and will be a vital part of PayPal鈥檚 business.

Venmo is homing in on Pay With Venmo, Cash App is continuing to expand acceptance within Square鈥檚 seller ecosystem and beyond, and Zelle is adding small and medium-sized businesses (SMBs) as partners. Early Warning鈥檚 bank partners are also exploring an ecommerce wallet鈥攖hough it may be too late to capture sales given entrenched ecommerce habits. Business offerings can boost spending.

Upgraded Venmo Business profiles. The change will help small businesses improve their discovery by adding subscribe options, profile rankings, and the ability to offer promotions in their profiles. This could help consumers find local small businesses endorsed by their networks. Why it matters: PayPal is on a journey to reinvigorate slower-than-anticipated growth.

Payment apps threaten to take the place of banks: Many, like Apple Pay and Venmo, offer checking-account-like features right in the app. The share of Gen Z digital-only bank account holders will grow 29.5% compounded annually from 2023 through 2026, which means neobanks have a real chance to win out. Digital gaming is also knocking.