January 29, 2018 / 6:11 AM / 3 months ago

What's Zelle? Banks hope commercials get customers to notice the app

NEW YORK (Reuters) - Big U.S. banks are spending millions of dollars to promote Zelle, their digital payment service, by running commercials on major sports games and entertainment shows, as well as a YouTube campaign painting the app as simple and ubiquitous.

People walk by a Wells Fargo banking location in Pasadena, California, U.S., September 8, 2017. REUTERS/Mario Anzuoni

The ads reflect a two-pronged effort by banks, industry insiders said: to wean customers from costly physical services like paper checks and branches, and gains on Venmo, a better-known payments app offered by PayPal Holdings Inc.

Venmo, launched in 2009, became popular among the coveted millennial demographic, primarily through word of mouth.

Zelle broke onto the scene less than a year ago after the big banks haggled over marketing and computer networking arrangements for a decade. Zelle is now in the hands of many more people than Venmo, and the network already processes more than twice as much in payments, as measured by dollar volume. But its brand recognition is low. [reut.rs/2DBPI1H]

So far, 95 million customers have access to Zelle through their banks, which are plugged into the network, said Lou Anne Alexander, group president for payments at Early Warning Services, the bank consortium operating the service.

Lately about 100,000 people a day have been signing into Zelle for the first time. Early Warning would not say how many people regularly use the service.

One new ad features 30-something rapper and Broadway actor Daveed Diggs as a modern-world laggard who insists on using money rather than Zelle to pay a friend.

On the way to a bank branch, he encounters a bus driver, a dog walker, a sanitation worker and an older woman in an electric wheelchair who all know about Zelle.

“Why am I walking to the bank?” Diggs bemoans by the end of the commercial.

The banks started to run ads nationally this month during National Football League playoff games and the Grammy Awards. Though Zelle would not say what its TV ad budget was, a spot can cost from $500,000 to well over $1 million, according to advertising trade publications. The banks have also put Zelle on billboards in stadiums, big-city retail centers and the New York City subway system.

Members of the bank consortium, including JPMorgan Chase & Co, Wells Fargo & Co and Bank of America Corp, are placing their own ads to attract more users.

The marketing campaign aims to get Zelle firmly planted in the minds of customers, ranging from ages 18 to 54, said Alexander.

The ads aim “to make consumers aware that the majority of them already have access to Zelle in their banking app,” she said.

In 2017, Zelle transferred $75 billion through 247 million transactions.

PayPal, which will report full-year results on Wednesday, has said that Venmo handled $30 billion in the 12 months through September.

PayPal has no plans to advertise Venmo beyond its millennial base, spokesman Josh Criscoe told Reuters.

Zelle’s ad campaign may signal that the banks and PayPal are going in different directions to make money from the services, which are free to individuals.

PayPal promotes Venmo as a valuable marketing tool for merchants who like that its users share on social media how they spend money. Some 3.5 million merchants are signed up to accept payments from Venmo, which receives fees for processing transactions.

Zelle can save money for banks as they spend less, for example, on stocking ATMs with cash, said Mark Monaco, head of Enterprise Payments at Bank of America Corp.

Banks hope that Zelle is a way to “cross-sell” products, analysts said, such as deposit accounts and mortgage and auto loan offers, said Michael Moeser, a payments analyst at Javelin Research & Strategy.

Corporate customers, such as insurance companies, and governments could save money by paying more of their own customers digitally on Zelle rather than with paper checks, Moeser said.

Reporting by David Henry in New York; Editing by Lauren Tara LaCapra and Jeffrey Benkoe

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