The US finance industry is slowly getting its ducks in order to try to compete with the likes of PayPal-owned social payments platform Venmo. Today bank network operator Early Warning announced it has 19 US financial institutions signed up to a forthcoming payments network called Zelle, due to launch in early 2017.
Initially there will be an effort to standardize money sending features across some of the partner companies’ existing online banking apps, according to Reuters, before they add the Zelle brand name to their mobile apps and websites. Also next year there will be a standalone Zelle p2p payments app as another touchpoint for the service, with Send, Receive and Split options (e.g. to split a bill).
Payments will be able to be sent via Zelle using just an email address or mobile phone number — from within either the mobile banking apps of the network’s banks or using the standalone Zelle app. While, to receive payments, a person would need to have a US checking or savings account and register at ZellePay.com (if they weren’t already signed up to the app), or else be using the Zelle app with a valid debit card account.
The 19 financial institutions signed at this point encompass some 76 million mobile banking users in all. The current list is as follows: Ally Bank, Bank of America, Bank of the West, BB&T, BECU, Capital One, Citi, Fifth Third Bank, FirstBank, First Tech Federal Credit Union, Frost Bank, JP Morgan Chase, Morgan Stanley, PNC, USAA, U.S. Bank and Wells Fargo.
Early Warning told TechCrunch it expects to have more signed up come launch next year. “Zelle is built to be scalable to include financial institutions of any size anywhere in the country. Much of this will be achieved through our partnerships, such as Fiserv and Co-Op, where we are already showing early signs of success,” said a spokesperson.
The company describes Zelle as an “open network”, with any US bank and credit union able to sign up, so the ambition is clearly to scale further. “This is about creating a wide, and inclusive, alternative to cash and checks for everyone,” is how Early Warning CEO Paul Finch couched it, speaking at the Money 20/20 payments industry conference in Las Vegas.
It is also touting security — given the structure of the network means users will be able to make p2p payments from right within their existing online banking app if they so wish (assuming their bank has signed up to Zelle).
“One of Zelle’s unique characteristics is that it is embedded within the online and mobile banking experience of individual network banks,” said the spokesperson. “That means customers never have to leave the safety of their financial institution to make a payment. There is never a need for a customer to provide an account number to a third party app, which is one very effective way for Zelle users to protect their identity and payments.”
While US financial industry giants have been trying to collaborate to combat disruptors in the social payments space for multiple years now, their efforts have yet to bear fruit. They only settled on the Zelle brand name this summer, for instance, and such ponderous development leaves plenty of space for payment startups to keep adding users.
Zelle’s task, therefore, will be to play catch up with the various players that have enabled a social payments space in the US. And most obviously with Venmo — which in recent years has been growing very fast. But it also looks to be aiming for wider appeal, rather than replicating a tight focus on app savvy Millennials. That’s a longer game, but one that has the potential for greater reach.
“The goal of Zelle is to offer consumers a consistent, easy, quick and secure experience to send and receive payments with each other. The larger the network, the greater the value to consumers who are looking for faster, secure ways to send and receive money with anyone in their lives,” added the spokesperson.
One thing that is not entirely clear is whether the network will charge for sending payments. On the question of fees the company had this to say: “There are no fees directly from Zelle. Pricing is set by network partners and as of right now, no partners are planning to charge fees.”
Any move to levy fees on p2p payments would put a less attractive spin on Zelle. Venmo, for instance, only charges a fee (3%) if you’re using a credit card to send money. While another US player, Circle, charges no fees for unlimited p2p payments.
And Facebook, which also launched friend-to-friend payments back in March 2015 using its Messenger app as the platform for sending money, also has no fees for sending debit payments via its network.
This article was updated with additional comment from Early Warning