articles Corporate /en/research-insights/articles/zelle-launch-to-accelerate-growth-in-crowded-p2p-payment-space content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

Zelle Launch to Accelerate Growth in Crowded P2P Payment Space

S&P Global Ratings

COP24 Special Edition Shining A Light On Climate Finance

S&P Dow Jones Indices

Considering the Risk from Future Carbon Prices

S&P Global Ratings

Plugging the Climate Adaptation Gap with High Resilience Benefit Investments

Empowering Public Private Collaboration in Infrastructure

Zelle Launch to Accelerate Growth in Crowded P2P Payment Space

The person-to-person payments space, where names like PayPal Holdings Inc. are dominant, is becoming even more crowded with the launch of a peer-to-peer network in the mobile applications of many of the largest U.S. banks.

The new network, known as Zelle, went live June 12, 2017. It enables fund transfers between bank accounts within minutes using email addresses or mobile phone numbers. Zelle joins the ranks of a number of entrenched services that consumers have grown comfortable utilizing to send money to one another.

In the coming year, Zelle functionality will appear in the individual mobile applications of the more than 30 participating financial institutions. Peter Tapling, chief revenue officer at Early Warning Services LLC, the bank-owned entity behind Zelle, said around 17 to 20 bank and credit union partners will refresh their apps to add Zelle in the next several weeks.

"We're taking peer-to-peer payments and we're moving it from millennials to mainstream," Tapling said.

Vining Sparks analyst Marty Mosby said Zelle will bring peer-to-peer payments into the mainstream and allow people to use the service more effectively. He said there will still be "inertia" around services from early-movers in the space like PayPal and Venmo Inc. PayPal Holdings acquired Venmo as part of its $800 million acquisition of payment processing startup Braintree in late 2013.

At its developer conference June 5, Apple Inc. said the iOS 11 Apple Pay platform, to be launched in the fall, will feature a person-to-person payment option.

"We expected that announcement from Apple last year at their developer conference," said Bernstein analyst Lisa Ellis. "So they're sort of late to the party."

In late January and early February, S&P Global Market Intelligence surveyed 504 individuals in the U.S. who had used mobile payment apps in the past 30 days, along with 400 individuals who had not done so. PayPal was the most popular service for sending or receiving money, followed by bank-specific mobile apps. Facebook Inc.'s Messenger app and Square Inc.'s Square Cash were also popular, but they trailed Google Inc.'s Google Wallet and Venmo.

Unlike some other peer-to-peer options, Zelle offers real-time fund availability, which is powered by a contractual obligation among the partner banks that requires them to move funds immediately. Transactions might clear later that day, but users should see money arrive in their accounts within five minutes or less, Tapling added. Zelle was built over a legacy payment structure, and most transactions clear over the existing Automated Clearing House payment rails, he explained. Since 2009, banks have offered their own individually branded peer-to-peer services on top of the clearXchange network.

Now the network has become available to 86 million U.S. mobile banking customers. According to data from Early Warning Services LLC, Zelle processed a network volume of $16 billion and completed 51 million transactions in the first quarter. Those figures represent clearXchange customers who will be live on Zelle in the next few weeks, Tapling said.

As of June 12, PayPal said it has more than 203 million active customers. The company's PayPal, Venmo and Xoom services processed $64 billion in total peer-to-peer payment volume in 2016. On its own, Venmo processed $6.8 billion in the first quarter and $17.6 billion in full year 2016.

"We welcome any development that helps people address the awkwardness of dealing with cash when paying friends or family back," a PayPal spokesperson said in an emailed statement. "We have multiple services to make that easy, including PayPal, Venmo, and Xoom, which work across multiple devices, operating systems, and financial institutions. Millions of our customers have been using their smartphones to send money for years, and the news that more financial institutions and companies will be introducing similar services will only help to increase digital payments.”

Credit Suisse analyst Paul Condra does not see Zelle as much of a disruption for rival services like Venmo.

"The [peer-to-peer] space is growing very fast, so you have other players that will grow and it doesn't necessarily mean Venmo will lose share," he said. Condra said Zelle seems focused on a slightly different use case than its peers. It may be aimed at larger transactions like a parent lending money to a child or businesses conducting transactions, he said.

The S&P Global Market Intelligence mobile payments survey found that about 72% of outgoing peer-to-peer transactions involved amounts exceeding $20. Mobile bank app customers were slightly more likely than PayPal users to send more than $50, although Venmo exceeded both bank apps and the PayPal service in that regard, according to the survey results.

Ellis said Zelle may be a long-term concern for PayPal and Venmo because peer-to-peer payments are increasingly commoditized. That means they are becoming core services within bank mobile applications and social message services.

Together, PayPal and Venmo are dominant in peer-to-peer, she said. The service is important to PayPal Holdings in terms of user acquisition and user engagement, so a migration toward other peer-to-peer services would mean that the company has to broaden its value proposition and user acquisition engine, Ellis added.

COP24 Special Edition Shining A Light On Climate Finance


− Green loans are evolving, with the Climate Bond Initiative forecasting nearly $1 trillion in green bond issuance by 2020.

− Despite the uptick in green bond and loan issuance, the market still remains relatively small, especially compared to the universe of assets comprising CLO 2.0 transactions.

− In our view, a green CLO market has large growth potential, boosted by regulatory initiatives and emerging interest from both issuers and investors in 2018.

− We built a hypothetical rating scenario for a green CLO to compare and contrast the underlying portfolio and structure with a typical European CLO 2.0 transaction.

− Our hypothetical green CLO analysis showed that green loans may have different fundamental characteristics to corporate loans, such as lower asset yields, higher credit quality, and higher recovery rates assumptions.

The global collateralized loan obligation (CLO) market has experienced a rebirth (2010 in the U.S. and 2013 in Europe). New issuance continues to increase due to investor familiarity with the product, as well as low historical default rates. While a market for green assets, such as green loans and bonds has been established for a while, although still of a relative size, a sustainable securitization market is still in its infancy. Considering the challenge in financing the amounts, S&P Global Ratings expects green CLOs to play a role in increasing the private sector presence in the sustainable finance market.

Following the Paris Agreement that came into force in November 2016, 184 parties have ratified the action plan to limit global warming. For this purpose, developed nations have pledged to provide $100 billion (about €87 billion) annually until 2025. As part of this deal the EU has committed to decrease carbon emissions by 40% by 2030. In March 2018 the European Commission (EC) proposed the creation of environmental, social, and corporate governance 'taxonomy', regulating sustainable finance product disclosures, as well as introducing the 'green supporting factor' in the EU prudential rules for banks and insurance companies.

Read the Full Report

Considering the Risk from Future Carbon Prices

Along with the advent of the 2015 Paris Climate Agreement has come a growing understanding of the structural changes required across the global economy to shift to low- (or zero-) carbon, sustainable business practices.

The increasing regulation of carbon emissions through taxes, emissions trading schemes, and fossil fuel extraction fees is expected to feature prominently in global efforts to address climate change. Carbon prices are already implemented in 40 countries and 20 cities and regions. Average carbon prices could increase more than sevenfold to USD 120 per metric ton by 2030, as regulations aim to limit the average global temperature increase to 2 degrees Celsius, in accordance with the Paris Agreement.

S&P Dow Jones Indices launched the S&P Carbon Price Risk Adjusted Indices to embed future carbon price risk into today’s index constituents.

Read the Full Report

Plugging the Climate Adaptation Gap with High Resilience Benefit Investments


- Adaptation financing needs to substantially increase to address the higher impact of extreme weather to society due to climate change.

- Adaptation projects are typically cost effective and bring wide range of resilience benefits.

- To demonstrate the value of resilience benefits to various stakeholders we consider that it is important to quantify those benefits based on a robust modeling framework.

- We expect that due to the large size of the adaptation gap and constrained public finances,private investment would need to make a considerable contribution to adaptation financing.

Dec. 07 2018 — We believe the recent surge in economic damage from extreme climatic events may focus the attention of public authorities about the need for adaptation investments and accelerate investment in this area.The United Nations Environment Program (UNEP) forecasts adaptation costs in developing countries at between $140 billion and $300 billion by 2030, and $280 billion and $500 billion by 2050. That is approximately 6x-13x above the amount of international public-sector finance available today--just to meet 2030 costs.

Over the last two years,the world has seen a flurry of extreme weather, which has exposed the vulnerability of many countries to these events. Climate change may make matters worse, irrespective of whether we manage to keep global warming to 2 degrees Celsius or not. Attention to climate change adaptation is therefore increasing, especially about how to finance it, given the need to raise enough public and private investment to fortify exposed countries and communities against the potentially devastating effects of physical climate risk.

Read the Full Report

Watch: Empowering Public Private Collaboration in Infrastructure

S&P Global CEO Doug Peterson speaks with Maha Eltobgy from the World Economic Forum, on their joint study that looks at how greater collaboration between the public and private sector can accelerate national infrastructure programmes.