How Does ZELLE Make Money?

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Zelle is a P2P (peer-to-peer payment network) payment network system. It helps users send money to their friends, family, or anyone who uses the platform safely. Zelle was instantly branded as a straightforward exchange platform after its establishment in 2011.

Zelle was established with the cooperation of Wells Fargo, Bank of America, and JPMorgan Chase. They decided to form a consortium to tackle the growing competition they faced from other payment apps such as Paypal.

It does not make any money right now. Instead, its participating banks generate revenue whenever a user pays the business in exchange. Zelle network was launched in September and currently has the participation of 924 banks in its network. By 2020, it has facilitated over 307 billion payments.

What Zelle Realy Is, and How Does It Work?

Zelle is a digital payment network that allows users to contribute money to their bank accounts on the same platform. This service is only available to U.S. bank account holders whose banks are part of the Zelle network. Registration doesn’t take a long time.

After registration, you can send money to your friend’s families who use the Zelle app. On the other hand, the Zelle network can be used within partner banks such as Wells Fargo or chase. To transfer money, all a user needs to do is enter the user’s phone number or e-mail address and phone number. The funds are generally shared within a matter of minutes.

This network is currently only available to consumers. Therefore businesses have to revert to other means of collecting payments. Zelle is powered by the Mastercard Send and Visa Direct payment chains. Modern-day banks almost always use either of the two as their payment processor, allowing any bank to partake in the Zelle network.

What Banks Use Zelle?

Zelle currently works together with 924 financial institutions. Most of its business partner banks even have the payment platform integrated into their mobile apps. As long as the user possesses a Mastercard or Visa debit or credit card, they can use the Zelle network to send money.

Owner Of Zelle

FinTech company Early Warning Services LLC owns Zelle.IT provides fraud management and prevision by giving early warning. It has offices in Chicago, Tempe, San Francisco, and Scottsdale.

Short History Of Zelle

Zelle, initially branded as clearXchange, after its establishment in 2011. Bank of America, Wells Fargo, and JPMorgan Chase decided to form a consortium to tackle the growing competition from other payment apps such as PayPal or Venmo.

In the initial days, clearXchange was still relatively clunky and slow. Sometimes it took users up to 5 days to transfer money from one account to another.

Furthermore, clearXchange was only available via the platform’s website or partner bank app, making it harder for the service to find nationwide adoption. To add to that, only a few banks participated in the network.

Lastly, features varied across all the partners of banks. This further complicated the user journey and made it more challenging for people to get used to the service.

That all changed in 2016. The service, which was previously owned by Bank of America, JPMorgan Chase, and Wells Fargo, was sold to Early Warning Services (owned by a consortium of banks).

Under Early Warning’s guidance, the speed of product development finally became on par with the owners’ ambitions. In September 2017, Zelle was introduced to publics.

The service inclueds than 30 U.S. banks. It’s equal to almost 100 million account holders. Zelle quickly picked up steam with some of the biggest U.S. banks as backers. The consortium spent up to $1 million per TV ad to introduce the app.

Furthermore, Zelle’s in-app experience was standardized across all participating banks, making it easier for new users to pick up the service.

Especially Gen Xers and Baby Boomers proved to be one of the significant growth channels. Many were not accustomed to any of the newer banking services like Chime and remained with traditional banks. That allowed traditional banks to target their existing customers better, introducing them to the world of P2P payments through Zelle.

These initiatives allowed Zelle to become America’s largest P2P payments service two years after launch. In 2019 alone, Zelle’s users completed around 743 million transactions while processing $187 billion in payments.

The service even became critical for people’s survivability. For instance, in Venezuela, which has been severely affected by hyperinflation, citizens have started using the app to pay for essential goods and services.

Yet, the service has also experienced some backlash along the way. Countless people reported that other Zelle users had scammed them. These fraudulent users would sell a product or service (on a platform like Craigslist), ask the buyer to send the money, retrieve it, and delete their account.

Zelle and its participating banks have responded by saying that they are not accountable to who their users send money to. Zelle now has repeated mentions on its website and app to combat these scams that urge users to only transfer funds to family, friends, or anyone in their close circle.

Despite those hiccups, 2020 has become an extremely successful year for the payment network. Users conducted a total of 1.2 billion transactions and sent $307 billion to each other.

Growth continued well into 2021. Tens of millions of consumers and business owners now use Zelle to send money to each other.

How Does Zelle Make Money?

Zelle does not make any money in the current time. During the clearXchange days, its participating banks tried to lay down fees for each and every payment made. These plans were shut down relatively quickly, given that other services like Venmo or Square Cash were free of charge right from the get-go.

We can expect Zelle will remain free of charge for the foreseeable future. That’s because participating banks need to retain their customers and safeguard themselves against upstarts like Chime or Venmo.

In 2018, Zelle launched a very useful feature that allows its users to pay businesses for goods and services. Merchants, in this case, pay up to a 1 % payment processing fee to Mastercard or Visa card. That revenue is then shared with the bank who has issued the card.

Future monetization sources may include the launch of a Zelle-branded debit or credit card or the promotion of other financial products within the Zelle app (i.e., earning money via affiliate commissions).

The company behind Zelle, Early Warning Services, receives payments from the participating banks in exchange for creating and maintaining the Zelle network. But as we know from the start, that Zelle app itself does not generate any revenue for its mother company.


I hope the article will help you understand How the Zelle company works and how it makes money.

Anup Karumanchi About Author

Anup Karumanchi was a blue-collar worker, carved his own path as a multi-skilled techie, by career pivoting and pursuing side-hustles for two decades, that helped him progress as a thriving solopreneur.

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