When peer-to-peer money apps like Venmo and Cash App exploded in popularity, many banks feared the worst: lost payments revenue, weaker customer relationships, and shrinking wallet share. But the data tells a different story. In this article, we look at how money transfer services actually change customer behavior, why adoption can strengthen engagement instead of erode it, and what banks must do to capture the full value of modern payment activity.
The rise of ecommerce exposed the limitations of traditional bank payment tools, especially when it came to giving consumers a simple way to “pay anyone.” For decades, that need was met mainly with cash and, to a lesser extent, paper checks. Both required the recipient to physically visit a branch or ATM to get their money.
The rapid adoption of e-commerce exposed the limitations of traditional bank payment tools. As online shopping took off, credit cards initially filled the gap. But consumers quickly realized that typing their credit card numbers into websites increased their risk of fraud. At the same time, merchants, often small ones without a physical storefront, found credit card fees too expensive. Many banks were also hesitant to support these small online sellers, which limited adoption.
The emergence of money transfer services (MTS)
Venmo was founded in 2010—its name combining vendere (Latin for “to sell”) with “mo,” short for mobile. The first version allowed people to send money via text message, but it soon evolved into a smartphone app. PayPal acquired Venmo in 2013. Users simply linked a bank account or credit card and could transfer money digitally.1
Cash App, originally launched as Square Cash in 2013, offered a similar service. It allowed people to send money with a debit card via email or text message, no matter which banks they used.2
Traditional banks were slow to respond to this growing “pay anyone” movement happening outside the core banking system. In 2011, Bank of America, JPMorgan Chase, and Wells Fargo introduced clearXchange. It let customers send money to anyone who also had a participating bank account, using just an email address or mobile number.3
The founding banks soon realized that to succeed, they needed a much larger network, something that would create the “network effect” essential for consumer adoption. In 2016, clearXchange was sold to Early Warning Systems, which relaunched the service as Zelle the following year. The relaunch was a success: Zelle has since expanded to more than 2,500 U.S. financial institutions.4
The impact of money transfer services on bank customer engagement
When MTS first emerged, many banks worried these services would erode payments revenue. During my time in banking, I was asked to determine whether “pay anyone” tools like Venmo and Cash App were hurting customer retention or profitability. We built a detailed profile of customers using these services and analyzed how MTS adoption affected customer lifetime value (CLV).5
The results were surprising, and positive. Customers who used MTS actually deepened their overall relationship with the bank. They used more bank products, making them more valuable, not less. We found that MTS often served as an extension of bank-based payment tools, including credit cards. We also saw a “clientele effect,” where customers preferred MTS for specific merchants or types of spending-based payment tools, including credit cards.
The bottom line
Rather than reducing payments activity, money transfer services actually increased it. By offering additional convenience—and enabling use cases like “pay anyone” and small-merchant ecommerce—MTS expanded the range of transactions traditional banks could support.
This is why capturing and analyzing all customer payment activity is so important. It’s also the driving force behind the upcoming Payments 360 data product within Teradata's Customer Intelligence Framework.
1. Felix Gillete, “Cash is for Losers!” Bloomberg Businessweek, 2014, https://www.bloomberg.com/magazine/businessweek/14_48.
2. Ian Sherr and Donna Tam, "Snapchat, Square want to make it easy for you to send cash," CNET, 2014, https://www.cnet.com/tech/services-and-software/snapchat-square-want-to-make-it-easy-for-you-to-send-cash/.
3. Aaron Smith, “New Cash Transfer Service Rivals PayPal,” CNN Money, 2011.
4. Early Warning Services, 2026, https://www.earlywarning.com.
5. Gary Class, “Customer Lifetime Value in Banking”, Teradata, 2025, https://www.teradata.com/insights/brochures/customer-lifetime-value-in-banking.