The big banks’ last best hope to undercut P2P pioneer and perennial millennial favorite Venmo got its newest convert — long time holdout Citibank.
Citibank now joins the ClearXchange partnership — a team of banking rivals that already includes Wells Fargo & Co., J.P. Morgan Chase & Co., Bank of America Corp. and U.S. Bancorp, among others.
Their Venmo killer under development is “Zelle,” the bank-backed smart phone app designed to make it easy for customers to quickly zip money between them. The app is still under development with expectations that it will hit the market in 2017.
Citigroup, until now, has been the last holdout among the first largest banks in the United States (by consumer demand deposits) to join clearXchange, which is jointly owned by existing members. Citigroup isn’t currently an owner. Zelle is designed to allow network users to transfer money via an email address or cell phone number that will be instantly available in the recipient’s banks account. The system can work because banks agree to accept each other’s transfers for instant deposit — even if funds have not fully settled on the back end.
If Zelle can actually make their transfers instant — that will give them a slight edge on services that still have a day or two waiting period before P2P funds can be withdrawn. However, due to PayPal’s newest partnership with Visa and Mastercard, Venmo is also offering instant transfers. Circle is also offering instant transfers — via use of blockchain technology.
The Popmoney app operated by Fiserv Inc. is currently what Citibank offers its customers for transfers. Earlier this year Fiserv said that Popmoney will also connect with the clearXchange network, paving the way for banks that use Popmoney to opt to use Zelle.