By Paul Richardson, SeniorConsultant
RLR Management Consulting, Inc.

Many of you may have seen a TV commercial in recent months from big banks like Wells Fargo or Bank of America regarding a service called Zelle. It’s a new peer-to-peer (P2P) payment service that allows consumers to send or receive money within minutes. Zelle was developed by Early Warning Services, a bank-owned technology services company. This platform came about from a need to take back market share from non-financial institutions platforms like Venmo or PayPal.

Consumers access Zelle from their bank’s website or mobile app, they can also access it directly from the Zelle app. Once they are enrolled, the customer initiates a transaction by entering a recipient’s email address or phone number.

Features of Zelle:

• Can be used directly from their bank or from the Zelle App. There are some limitations if you’re using the stand-alone app from Zelle, for example, you can only send money to users with access to Zelle through their financial institution. Therefore, at least one side of the transaction (sender or receiver) must have access to Zelle through his or her financial institution. You also have limits on the amount you can send.
• Funds are sent in most cases via the ATM network which makes funds available right away. The ATM network is the payment pipeline that your POS and ATM transactions use. Other P2P platforms use the ACH network which could delay funds being transferred to your account as long as 3 days.
• Payments can be split among multiple people and a memo can be added to the payment.

Benefits of Zelle:

• Secure! Customer account information isn’t shared among others in the network.
• Fast! For some P2P services it could take up to 3 days for the funds to be transferred. With Zelle the transfer happens within minutes.
• Free! Zelle doesn’t charge a fee to the consumer for sending or receiving funds. Many other P2P platforms do charge for expedited payments.

I personally have used many types of P2P and up to this point I haven’t been thrilled. Since Zelle has come on the scene I’ve been very impressed with the service. For a deep dive on Zelle, please read this article from the American Bankers Association. https://www.aba.com/Tools/Function/Technology/Documents/UnderstandingZelle.pdf