The peer-to-peer payment wars wage on (PYPL)

Zelle remains on track to beat Venmo. Its $75 billion processed in 2017 dwarfed PayPal’s $35 billion total, though it’s worth noting that some of Zelle’s total is a composite of P2P volume at Zelle’s partner banks, since the service had a staggered rollout.

That lead should continue into this year, since PayPal CEO Dan Schulman noted that Venmo is back on track to hit $50 billion in volume this year. And that projection is well below Zelle’s 2017 total, meaning that the firm doesn’t need to grow at all in 2018 to stay ahead of Venmo.

But it’s unclear if that lead will last. Zelle’s 14% growth rate is slower than Venmo’s 18% figure for the same period, which means it could be at risk of being outgrown at some point next year.

Venmo is adding users fast — the service added more new active users in Q1 2018 than in any other quarter, and was one of the top drivers of PayPal’s 8.1 million new customers in the quarter. And it’s also aggressively rolling out new offerings, like a Pay With Venmo buy button, which helps Venmo monetize, but could also encourage engagement and help spike volume for the service.

So Zelle needs to continue to work on playing up its strongest assets in order to maintain its positioning. Zelle has an addressable base of at least 95 million customers, but the vast majority of its volume has come from the largest of its over 100 partners.

The firm therefore needs to work to convert more of its addressable base from potential users to active users. It can do this by resolving its rumored fraud problem and focusing on security, emphasizing its free real-time functionality (Venmo users have to pay a 25-cent fee for instant cash out), and marketing its utility for higher-value transactions rather than social use cases.