A number of huge U.S. banks are joining a new service that aims to bring real-time, peer-to-peer payments to consumers, but it’s unclear if the service will actually be able to take on the incumbent, trendy peer-to-peer service Venmo, which is owned by PayPal.

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The banks are hopping onto a service from Early Warning, which unlike Venmo will deliver money from one account to another in seconds. Venmo transactions, in comparison, take around one to three days to be finalized.

[On the other hand…]

“Banks have been trying to create PayPal competitors for more than 15 years with spectacularly little success,” said Wedbush analyst Gil Luria.” In fact clearXchange has been around for several years with no discernible results.”

The thing is, consumers really like Venmo already. During the month of January, more than $1 billion was transferred on Venmo, more than 2.5 times the amount transferred on Venmo in January 2015 and more than ten times the amount transferred on Venmo in January 2014.

For now the only real differentiator is speed, and that may not be the case for very long, considering that the network Venmo uses to transfer funds plans to begin processing payments more quickly in September, according to Reuters.

My 2 cents:

At this point, the mechanics of peer-to-peer cash transactions isn’t rocket science, which warrants the question: why are financial institutions taking so long? The idea of substituting PayPal or Venmo might not be the crux of this debate though. Banks are (still) where people keep their money, so PayPal still needs bank cooperation (no, not being Venmo compatible does not drive one’s banking decisions… yet). With this ability to foreclose would-be competitors in fintech, it looks like banks could easily outsource the expenses that’d go into investing into their own (likely unpopular) p2p cash transfer product to existing and emerging fintech players. Let the best and most popular player have access to accounts!

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