What happened

The stock market was in full retreat mode on Wednesday, but it really pulled back on the stock of high-profile fintech PayPal Holdings (PYPL 2.65%). The company's share price declined by over 4%, a far steeper fall than the S&P 500 index's 1% drop, on news that a big consortium of rivals might be muscling into the consumer payments space.

So what

Wednesday morning, citing "people familiar with the matter," The Wall Street Journal reported that Zelle could be making such a move. According to the article, the companies behind the popular instant money-transfer system were considering how to provide it as a payment option at retail store checkout counters. 

Person carrying shopping bags in a mall.

Image source: Getty Images.

Zelle was launched in mid-2017 and has proven to be a popular instant-transfer service for people wanting or needing to pay others quickly. It is owned by a company called Early Warning Services, whose shareholders include three of the "big four" U.S. lenders -- Bank of America, JPMorgan Chase, and Wells Fargo.

The massive customer base of the trio alone has already made Zelle a strong presence in the fintech space. According to Early Warning Services, in 2021, 1.8 billion transactions totaling $490 billion were effected through the system.

PayPal has not yet commented on the Journal's article.

Now what

The investor reaction to the article, and the real threat to PayPal's business, is probably overblown. While PayPal users can currently use their account at the register, the process of setting this up is rather clunky -- it's easier just to wave a properly equipped smartphone at a reader or whip out a payment card. So PayPal's strength isn't in the retail segment.

Nevertheless, the latest news shows that the powers behind Zelle have greater ambitions for the system. PayPal investors, then, should watch how Zelle's plans develop and how/if this might butt into their company's business.