If you’re looking to send money to someone and happen to live in the United States, there is no shortage of options. These include bank transfers, wire transfers, and third-party applications such as PayPal, Venmo, Apple Pay, Google Pay, and Samsung Pay. One of the common characteristics of each option is that it either costs money to use them, or there is a delay in the recipient’s ability to use the money that is sent, or both. For this reason, Zelle, the payment service founded in 2017, has become very popular recently. This article discusses five significant facts about Zelle to get you up to speed on the company changing the payments landscape.
1. Zelle processed more than 1 billion dollars every day last year
In 2021 Zelle processed $490 billion in payments on its network, representing $1.3 billion of payments processed on average each day last year. This is more than double the payment volume sent using Venmo, which is more than double the volume sent.
2. Zelle was started by banks and is owned by banks
The history of Zelle goes back to its predecessor company, clearXchange. This was similar to Zelle’s peer-to-peer payment linked to your bank account. JPMorgan Chase, Bank of America, and Wells Fargo owned and operated the predecessor company. Following a restructuring transaction in 2016, the ownership of Zelle consisted of Bank of America, Trust, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo. As far as we know, these banks maintain ownership of the payments service.
3. More than one thousand financial institutions are partnering with Zelle
There are now well over a thousand financial institutions that are part of the Zelle network. In addition, according to the company, consumers of nearly 10,000 financial institutions participate in the Zelle network. These figures shouldn’t be surprising given the scale mentioned above of the service: almost half a trillion payments processed in 2021. However, while adoption is broad, there is a notable divergence in the number of banks and credit unions that use Zelle. Given the restrictive nature of the latter, it’s a good idea to find out what credit unions use Zelle before committing to a credit union. With all that said, we expect the adoption of Zelle to grow over time.
4. Zelle is fast and completely free
As we alluded to earlier, there are arguably too many options for sending money to the United States. Zelle stands out compared to Venmo, PayPal, Apple Pay, and the remaining competitors because it is faster and cheaper. Each competitor has a delay of at least 1-2 business days when you send money using their service. This becomes especially problematic if you send money on a Friday or before a Federal Holiday. If you wanted to access your money immediately, you’d need to pay a fee if you were using Apple Pay or Venmo, for example. With Zelle, you get access to the money that is transferred almost immediately. This is in addition to the fact that it is very straightforward to send money using Zelle. You don’t have to provide or request bank account or routing number information. All you need are e-mail addresses or phone numbers.
5. Zelle is essentially a non-profit
Despite all the positive attributes of the service, including how widespread it has become adopted, Zelle isn’t a big business. In some ways, it isn’t a business at all. As of this writing, Zelle doesn’t make money from fees from its users or financial institutions. This might seem a little strange given Zelle’s value and the fact that it can provide something that none of its competitors can. We suspect the non-profit characteristic results from the service’s ownership structure.
On track to be the default P2P payment service
Zelle is not just easy to use and very fast, but it is free, which is difficult to beat, almost by definition. While the service has had its fair share of issues, most notably scammers perpetrating fraud using the Zelle Network, the benefits outweigh the costs. Consumers have saved millions of dollars by using Zelle Network and benefitting from the fact that it is fast. It wouldn’t surprise us if the adoption of Zelle continues to grow, and in the not too distant future, it becomes the default way that consumers send money in the United States.
