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The bigger picture: This is not the first time Zelle has been under fire for its fraud prevention practices. The Securities and Exchange Commission (SEC) looked into JPMorgan鈥檚 Zelle complaint process in February and Wells Fargo鈥檚 in May. And in 2023, Democratic senators asked regulators to strengthen consumer protections against Zelle.

Our take: This enforcement action offers Block and Cash App closure on the CFPB鈥檚 investigation鈥攗nlike its peer-to-peer (P2P) payment competitor Zelle, which faces a CFPB lawsuit over its own fraud prevention practices.

The big three have succeeded in part by carving out their own niches: Zelle is typically used for higher value payments thanks to its bank backing; Venmo is popular among younger consumers for its cost-splitting; and Cash App markets itself as a bank and is popular among crypto users.

Gen Z has also embraced Zelle, as the bank-owned app keeps building a bigger share of peer-to-peer (P2P) transaction value and usage. Gen Z will also propel in-store mobile wallet usage.The number of Gen Z mobile proximity payment users will rise from 32.8 million in 2024 to 50.0 million in 2028, per our forecast鈥攚hich will represent 37.7% of overall users.

Gen Zers favor Venmo, Apple Pay, and Zelle mobile wallets. Venmo鈥檚 social media roots keep its allure strong among younger consumers. And Gen Z鈥檚 preference for iPhones gives Apple Pay a big lead over other in-store wallets, such as Google Pay and Samsung Pay. But Gen Z has also embraced Zelle, as the bank-owned app keeps building a bigger share of peer-to-peer (P2P) transaction value and usage.

The CFPB sued Early Warning Services (EWS) and three of its owner banks in January, claiming they failed to protect consumers from fraud on Zelle. The agency also ordered Block to pay $175 million over what it claims was a failure to protect Cash App customers from fraud. Our take: We knew the CFPB鈥檚 recent rulemaking and other initiatives would be overhauled once Trump.

In addition to trust issues, X Money will have to compete in a highly saturated market where consumers are already loyal to their preferred platforms, like Venmo, Zelle, and Cash App. This article is part of 蘑菇AV鈥檚 client-only subscription Briefings鈥攄aily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends.

Payment networks like Zelle, Venmo, and Cash App provide real-time payment options to consumers鈥攂ut they do not settle the funds. For example, Zelle typically credits transactions instantly to payees. But the actual settlement of funds occurs instantly only via the RTP network (if the sender鈥檚 and recipient鈥檚 banks both use it). Otherwise, transactions are settled later via ACH.

Zelle has moved more than 5 billion payments in five years. Looking ahead, it plans to dive deeper into fraud prevention, SMBs, and disbursement

As lawmaker pressure mounts, JPMorgan and other major banks are said to be devising a plan that would reimburse Zelle fraud victims.

US consumers lost an estimated $440 million in Zelle fraud and scams, and Sen. Elizabeth Warren wants regulators to take action.

A new tax rule, which requires digital payment apps to report business payments over $600 to the IRS, doesn't apply to Zelle.

They want banking regulators to look into how banks that offer Zelle protect consumers as fraud concerns grow.

Innovation road maps should center on what Gen Z wants, such as Zelle and young adult debit cards. They鈥檙e also looking for innovation in credit card apps, budgeting tools, and QR codes. Promote the history and purpose of credit unions and community banks.

So far this year, 83% of US adults have been scammed or targeted by fraudsters on payment apps like Venmo, PayPal, and Zelle, per Security.org. This is a sharp increase from the 68% who said they were scammed last year and the 48% in 2022. The bigger picture: While ID verification can help protect users, it also adds friction to the payments process.