BofA sees Zelle P2P cash gifts rise during COVID-19

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Bank of America has seen a 33% increase in cash gifts flowing through the Zelle P2P app since the start of the pandemic, with total gifting volume reaching $1 billion.

BofA's analysis of anonymous memo line data shows that Zelle transactions for gifting rose to among the top three use cases for the P2P app since the pandemic began, according to Christy Lillie, BofA’s head of digital transfers. Previously it was on the lower end of the top 10 use cases.

“We’re seeing a real surge in spending for giving and generous purposes, and with COVID-19-related unemployment hitting people unevenly, it seems that a lot of people are helping each other out,” Lillie said.

The surge of transactions associated with terms like “gift,” “help,” and “donation” began in the second or third week of April, and has continued to rise until it’s settled in at a new, higher level, BofA’s data indicate.

The other top use cases rotate between paying for utilities, rent and reimbursing friends, Lillie said.

Younger users continue to drive more transactions, with about 60% of BofA’s Zelle users now under age 40.

“There’s a perception that Zelle is most popular among older folks, but in the last two years we’ve seen usage steadily rise among younger adults,” Lillie said.

Anecdotal evidence suggests BofA’s younger customers tend to use both Venmo and Zelle for routine P2P transactions, but they lean on Zelle for higher-ticket transactions and bills, she added.

“Venmo is still popular; it has the pizza and beer,” Lillie said.

BofA has seen a spike in scams leveraging Zelle since the pandemic began, particularly where consumers are duped into purchasing items that never shipped, and the bank has beefed up resources to spot and block scammers.

“We’re constantly working to educate consumers to prevent scams, and we’ve invested in an entire group to battle it,” Lillie said.

Outright fraud — where consumers did not authorize payments — is another story.

BofA doesn’t disclose fraud rates, but Lillie says all confirmed fraud is 100% covered.

“Fraudsters have definitely stepped up their activity during the pandemic, and we’ve doubled down on our bank-grade tools to fight it,” Lillie said.

In August of this year, BofA added another layer to the process of identifying Zelle recipients, by displaying the full name of the bank account’s owner even if the recipient has a shortened or different last name.

“For complete transparency, the sender now sees the exact name of the formal account owner provided by the recipient’s bank, which helps people be sure they’re sending to the right person,” Lillie said.

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