New Money: Venmo, Blockchain and Bears, Oh My!

Wire transfers have so much potential to go awry that many who receive them worry until the funds are clearly in the bank. That may explain why the relative ease of a wire transfer has rolled into investors and others using newer methods to transfer money bank to bank.
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Wire transfers usually following real time gross settlement systems. These systems are characterized as instantly available and irrevocable. That is, there is no waiting time for a transfer to process. Once a wire is completed, the money has been accepted by the other bank and is ready to be used. Contrary to popular opinion, wire transfers are not instant (though the funds are instantly available once they clear). Instead a transfer request may take days to process before the actual wire occurs. And, to complicate matters, the banks involved in the transfer process must hold reciprocal accounts with each other (sometimes referred to as corresponding banks). This network of corresponding banks has been decreasing since 2015. A World Bank Survey done in that year found that half of all banks surveyed were looking to reduce their corresponding banking efforts.
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The first alternative to wire transfers was Paypal, whose roots originated in the peer-to-peer payment system. Paypal, which has its own ap, has since acquired Venmo, a social payment ap. Paypal now has direct invoicing systems, allowing small businesses to create invoices within the software package.
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Paypal and Venmo aren’t the only game in town. In fact, they are losing ground to large financial institutions, including Bank of America and Wells Fargo, among others. Those banks created Zelle, a competing social payment ap. Usage of both aps is huge. Reportedly, Zelle cashes in at 56 million users and to Venmo’s 38.7 million. On the small business side, Square continues to grow and now chips away at this business at 9.5 million users.  
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The key differences between these aps is the speed in processing time. Zelle allegedly can process transactions within minutes, where as Venmo may require a one to two day business lag. Paypal now allows for real time transfers from the Paypal account to the Paypal user’s bank account for a nominal fee (currently at $0.25 per transfer) in addition to the usual Paypal costs.  This means that Paypal, Zelle and Venmo may replace wire transfers. However, transaction amounts are limited on Venmo to either $299 or $2,999 depending on the level of verification of the account. Payments on Zelle are limited to $1,000 per day and an aggregate of $10,000 per month. Paypal’s limits are higher, with a max of $10,000 per transaction and a total transfer amount of $60,000.
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Blockchain, unlike electronic transfers, works in a slightly different manner. Sets of information about a transaction are relayed to the network in blocks to be verified.  Upon verification, those blocks begin to link together into strings of blocks or chains. This verification system provides comfort to transaction parties on two aspects: first, the verification of the date and second, the transparency of the process.
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Because of its transparency, some institutions are calling for using blockchain protocols in pension programs, such as Akropolis. Blockchain also has created retirement plans allowing cryptocurrency investments. Dutch pension companies are testing a blockchain-based system that uses the transparency of the network verification system to reduce the cost and time of administering pensions. Other analysts say that the transparency of the blockchain network may help entice people to save for retirement by reducing concern about fraud.
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