Is there a war brewing between Venmo and Zelle?
In a recent news story, PNC bank blocked customers from using Venmo. Venmo is a popular application from PayPal that enables Venmo users to move money between bank accounts. A Venmo user might send $25 to a friend to pay for dinner eg.
PNC is part of the bank network that owns Zelle.
Zelle is a direct competitor of Venmo
“We’ve made some security enhancements which may be causing difficulty when attempting to link your PNC acct with Venmo. If you are having this difficulty, you may want to explore alternative means of money movement, such as Zelle, or work directly with Venmo on other options,” said PNC.
Venmo responded via tweet: “ “Hey PNC Bank…Let me use the financial service apps I need!”
The battle is around the data gold. Banks hold the data that FinTechs need.
PNC blocked data aggregation provider Plaid from accessing PNC customer account data. Plaid is a popular Fintech tool for performing KYC checks as well as mitigating ACH processing network NSF’s.
Essentially Venmo asks users to log-in to their online bank platform using Plaid. Once logged in, Venmo “tags along” and can view bank account data, history and can validate account ownership.
Banks are heavily invested in Zelle and make revenue from Zelle usage.
So what does a platform that needs to mitigate ACH payment risk and perform KYC to do?
There are alternatives to having the customer log-in to their bank platform. Using data from the majority of banks in the US an API call can be made. Data points being sent for authentication would include name, bank info, last 4 of social etc.
Via API a response validating or denying account owner authentication is returned.
Although an actual dollar balance can not be provided or checked against the account ownership and account validity are both checked.
If banks continue to block Plaid and similar competitors, this option can become a viable alternative.
Plaid like solutions create user friction as many people don’t like the idea of having to log-in to their bank site, causing barrier to usage.
For more information on Checking Account Ownership Authentication Solutions visit AgilePayments.com