Many travelers have realized that global payment applications are a great way to lower costs and save time when completing purchases on the go. As a result, countless numbers of Fintech startups have sprung up with a singular mission to make communication and payments easier for travelers.
Venmo was founded in 2009, and after pioneering the way Americans conduct mobile transfers, was acquired by Paypal in 2013. Today they serve over 40 million users.
Venmo accounts act as a central wallet that connects all your bank accounts, so users can easily send money without the need of going through different locations or banks. Ultimately, transfers within the app have no cost, as no money is actually moving between users.
Although it is free to receive money and pay with Venmo directly, depositing or withdrawing money to a personal bank account comes with a 1% fee. This makes it only convenient if everyone uses it because family, friends, or colleagues also need to have an account.
Zelle was the result of an attempt by JP Morgan and Bank of America to compete against Venmo. As of now, the battle is fairly equal in regards to usage and their models are very similar.
Pros: By using one app, you can in fact pay P2P to other counterparts who also have an account on the platform. It’s convenient because it’s free and fast.
Cons: There are charges for adding or withdrawing money from an account. In addition to this, there is also a lack of communication features. When sending money, you can leave a note, but for direct communication, you’ll need to use other messaging apps to discuss the payment.
TransferWise & Revolut are leading the way for international transfers.
TransferWise allows travelers to avoid costly cross-border transactions incurred by doing bank-to-bank transfers. TransferWise matches other outgoing currency payments and converts them in tandem to grab the needed currency and amount with a low cost to the user.
Revolut uses a model similar to Venmo and Zelle. Payments inside Revolut within Europe are free via the Single Euro Payments Area (SEPA). However, if you exceed 9,000 Euros per month, there is a 0.5% charge.
Pros: It is more cost-effective to make international transfers than with traditional bank providers.
Cons: Revolut is still not available for US residents. Also, both payment options have no convenient messaging system to communicate with the other party.
The race for integrating payments with chat applications has begun. Nevertheless, it still has its difficulties. The availability of these tools comes down to the place of residence of the individual.
Both WeChat and Facebook Messenger are attempting to merge these two systems. Yet, the timeline is unclear as to when it will be enabled on a global scale. To date, these two giants are the leaders in this race.
Facebook has recently rolled out payments on Messenger for US residents only. By connecting a credit/debit card, users can make payments to other users utilizing Messenger and WhatsApp. However, their system uses third party providers such as Paypal and Stripe.
This provides less cost advantage when using other payment services. Thus, Facebook is only providing convenience, rather than cost-saving benefits.
WeChat also has its limitations. In order to use WeChat payment services, users must hold a Chinese Bank account, making it difficult for non-Chinese users to utilize the application when traveling outside of China.
Pros: It is convenient with messaging and sending money to counterparts or in store payments.
Cons: It’s only accessible in the USA and China, and fees are not as cost-saving compared to other payment services.
Though the four companies listed above are the leaders in their space, they are not alone. There are hundreds of projects around the globe attempting to solve the same problem. One such project out of Singapore, Sidekick, is working to combine chats, payments, AND a marketplace!
When traveling internationally, using the tools above can help with messaging and sending money on the go. For now, an individual still needs to use seperate applications in most circumstances. The need for a “one service for all” for P2P has still not materialized. Only time will show which project will be the next disruptor of chats and payments.