The U.S. banking industry’s answer to Venmo has now arrived. Starting this month, a new, person-to-person payments network called Zelle will roll out to the over 86 million mobile banking customers here in the U.S., promising a faster form of digital payments compared with apps like PayPal, Venmo, Square Cash, and others. Instead of transfers taking place overnight or after a couple of days, Zelle users can move funds from one bank to another in a matter of minutes.
While banks have always had the means to offer instant transfers, the current system required that customers have the account and routing numbers for the associated accounts. Zelle, meanwhile, is meant to offer a simpler method – like today’s popular payment apps, Zelle users only have to know information like a person’s phone number or email.
The service has been in the works since 2011, when Bank of America, Wells Fargo and JPMorgan Chase teamed up to work on a digital payments solution that would allow their customers to send money to each other through a join venture then called clearXchange.
But the consortium dragged its feet in terms of adding more partners over the years that followed. However, it last year saw some renewed vigor. ClearXchange rebranded to become the more consumer-friendly “Zelle” last summer. Then, in October, the bank-owned entity Early Warning – which has been running clearXchange for several years – announced that Zelle then had 19 U.S. financial institutions on board, and promised a Zelle launch in early 2017.
Zelle missed that launch time frame by a bit, but it’s finally shipping.
According to an announcement from Early Warning released this morning, Zelle will begin rolling out to partner institutions starting this week, and that will continue over the course of the next 12 months. Instead of being a standalone mobile app, like Venmo, Zelle instead will initially become available within the mobile banking apps of the participating financial institutions.
This list of supported banks includes the following (in alphabetic order): Ally Bank, Bank of America, Bank of Hawaii, Bank of the West, BB&T, BECU, Capital One, Citi, Citizens Bank, Comerica Bank, ConnectOne Bank, Dollar Bank, Fifth Third Bank, FirstBank, First Tech Federal Credit Union, First Tennessee Bank, First National Bank, Frederick County Bank, Frost Bank, HomeStreet Bank, JP Morgan Chase, KeyBank, M&T Bank, MB Financial Bank, Morgan Stanley, PNC Bank, SchoolsFirst Federal Credit Union, Star One Credit Union, SunTrust Bank, TD Bank, USAA, U.S. Bank, and Wells Fargo.
To make the system work, Early Warning also has strategic partnerships with top payment processors in the banking industry, including CO-OP Financial Services , FIS, Fiserv, and Jack Henry and Associates. These agreements, it says, will help to expand Zelle to community banks and credit unions going forward.
Some U.S. banks had already been using the clearXchange Network, which is the foundation for Zelle. In Q1 2017, over 51 million transactions flowed through this network, totalling over $16 billion. And in 2016, the network had supported $55 billion in P2P transactions, says Early Warning. That’s far larger than Venmo, which recently reported $6.8 billion in total payments volume in its last quarter.
With Zelle, the goal is to take the existing clearXchange network and make it known to consumers, who – as with Venmo – will only need to know a person’s phone or email to use it. Like Venmo, Zelle is meant for the same sort of quick, personal payments – like splitting the dinner bill with friends or roommates collecting utility and rent money from one another.
“Fragmentation has been frustrating for consumers. Inconsistent experiences, have made it difficult to send and receive money between banks,” said Paul Finch, Chief Executive Officer, Early Warning Services, in a statement about Zelle’s launch. “Zelle unites the financial community behind a single, real-time P2P payments experience for millions of consumers,” he adds.
“Together, we are removing friction from finance, allowing money to move seamlessly between accounts in minutes. This revolution in money movement will create for consumers a viable alternative to checks and cash.”
Zelle will work on bank’s websites and in their apps. After the sender provides the email or phone number and amount, the recipient gets a notification that explains how they can can complete the payment. The money will then be available minutes later. A Zelle app will arrive at a later point, but Early Warning declined to say when beyond “the coming months.”
Consumers are being advised to check with their bank for details on when Zelle will work at their bank, as the rollout varies between the different institutions.