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How does Zelle make money

What is Zelle?

Zelle is a digital payment platform that make it super easy to send money to friends and family, even if your bank is different from theirs.

30 large banks in US including Bank of America Corp, JPMorgan Chase, Wells Fargo came together to develop this peer-to-peer(P2P) network to compete with digital wallets like Venmo and Square cash, which were gaining popularity

How Does Zelle Make Money?

What does Zelle do?

Zelle is part of many banking apps already. One can use it to send or receive money easy, fast and safe, making the entire process error-free and convenient.

There are more than 1000 banking apps with Zelle in-built in America, offering you the comfort of transferring money to your family, friends and others without downloading any other app.

 If Zelle is not yet part of your bank or credit union, you can still use it by downloading Zelle app.

Zelle is already being used by millions across America every day. A record 1.2 billion transactions were completed on Zelle app in 2021 to transfer $307 billion. 

It is available only in US and for account holders of US banks. It is owned by Early Warning Services LLC, which provides network intelligence that helps financial institutions complete money transactions. 

Currently, Zelle is available only for Peer-to-Peer money transfers, therefore businesses can’t use it.

 It uses Visa or mastercard network, which is also the network used by most of the banks in America, it is easy for any bank to be a part of the Zelle ecosystem.

The user needs to have a Visa or Mastercard Debit card linked to a bank account in US. 

As the sender enters a few details like the recipient’s phone number and email address, the money is transferred instantly, completing the whole process in a few minutes.

 The receiver can find money credited into his account without him to take any other action. Business debit cards, credit cards and cards linked to international accounts can’t use this facility currently.

Zelle History

Zelle instant money transfer service was launched in 2017, which was an advanced version of ClearXchange offering payment services through its member banks and its own website.

But the origin of this idea goes back by a few years.

Bank of America, JPMorgan Chase, and Wells Fargo originally owned ClearXchange jointly from April 2011. Later on Capital one and US bank also joined this network of 3 banks, and it was sold to Early warning services in January 2016.

In September 2017, ClearXchange was rechristened as Zelle and its mobile app was launched. By December 2017 all the ClearXchange person-to-person payment service accounts were migrated to the new platform Zelle with new registration

How does Zelle work

The individual accounts are linked to their email address or phone number. The Zele service is targeted for payments where the payee knows and trusts the receiver of the money already.

While a registered user can send money to another registered user easily, even the unregistered user can be sent money using this platform, in which case the recipient is informed to complete the registration for the transaction to conclude successfully.

Zelle app has been very successful in attracting customers because of the convenience it offers and no additional charges to be paid. Within a few years, it has become the largest person-to-person payment app in America. 

The reason for the same is not very difficult to find. Whether you want to chip in for a group gift being bought for a friend’s wedding or gently reminding a sibling to pay her part of money for the last holiday you had together, Zelle helps you do it in a flash.

That’s where customers find a huge convenience, and no wonder they have lapped up this offering with much gusto.

Banks have also found it a wonderful idea, as they don't have to worry about opening new branches or setting up additional ATMs.

Zelle app has helped them move up the value chain with their customers by offering ways to decrease uses of cash and contribute to creating a truly cashless society. 

There have been a few challenges on the way, which the platform has handled with help from participating banks.

 Any transaction issue is generally handled as per the policies of the concerned bank and specifics of such an incident. Individual banks have placed certain limits on the amount of money that can be transferred in a single transaction or in a day.

Some are also using a secondary confirmation method like text message to mitigate any risks of fraudulent activity.

Zelle marries the advantages of a digital wallet and a traditional bank account to create an awesome customer experience.

 With payee’s and receiver’s bank accounts linked to their email address or phone number, there is no need to log into an account to transfer or receive money.

The app works on always-at-work principle to allow transaction 24*7 at the click of a few buttons. The entire process takes a few minutes instead of the days it used to take historically.

The sender just needs to log into bank’s app or Zelle app to trigger the transaction with only the phone number or email address of the receiver which is generally stored in the address book of the phone. He doesn’t need to remember any account number to transfer money. 

The receiver if an existing user will see this money credited into account within minutes or will receive an email or text notification from zelle indicating that user has initiated a payment to receiver along with a link to activate his account and receive payment.

If the recipient is not an existing user, it may take 1 to 3 days to receive the payment credit in the account.

In case the recipient’s bank is not part of the Zelle network, the Zelle app will need to be downloaded and visa or mastercard debit card will have to be enrolled.

 Once enrolled the money will be directly received in receiver’s account. If the recipient does’t enroll the zelle profile within 14 days of initiation of transaction, the payment will expire and the amount will be restored to sender’s account.

Who owns Zelle?

Zelle is a money transaction platform enabled by Early warning services, LLC.

Early warning services is a private financial services company owned by a group of banks, such as Wells Fargo, Bank of America, Chase, U.S. Bank, PNC, BB&T, and Capital One

How to send money with Zelle?

Sending money with Zelle app is a breeze. Let me help you with instructions for the same.

  1. Open your bank app if it is on Zelle network or open Zelle app

  2. Log into your app

  3. Tap on the option “Send Money”

  4. Select the recipient by name or phone number on select recipient screen. You can click on the QR code icon displayed at the top of the “Select Recipient” screen, if you want to use QR code of the recipient.

  5. If you have selected the QR code method, your phone’s camera will be switched on automatically. Point it at receiver’s Zelle QR code.

  6. Now enter the amount

  7. Fill “What’s it for” with the reason for sending money.

  8. Hit “Send”. The money is on its way!

How to receive money with Zelle?

Receiving money on Zelle is simple. If you already have a Zelle account, you don’t need any action.

The money will be automatically credited in your account. In case, you don’t have a Zelle account, you will receive a notification through an email or a text message from Zelle with a link.

  1. Go to the received message and click the accompanying link.
  2. Choose your bank/ credit union.
  3. Follow onscreen instructions to get money into your account.

In case, your bank/ credit union is not on Zelle network, Follow below steps:

  1. Download Zelle app.
  2. Enrol with your Visa or Mastercard Debit card at Zelle app.
  3. Money will be credited to your linked account.

Daily transfer limit of Zelle

There could be certain limits on your daily transfers.

These limits are decided by your bank or credit union if they are on the Zelle network and you need to contact them directly to know the daily transaction limit.

If your bank or credit union is not a part of the zelle network, your weekly send limit is $500

How does Zelle make money?

It doesn’t cost you any extra money to do transactions on the Zelle app. Therefore, it doesn’t earn any direct revenue. However, the partner banks or credit unions pay a certain percentage of their transaction fee charged to the customer for money transfer to the Zelle app.

That helps Zelle not charge anything extra which is done by other competitive apps like Venmo and Square.

Banks are happy to share their transaction charges with Zelle as it helps them provide better service to millions of customers without spending anything extra.

The fact that money transfers, which is the highest number of transactions in personal bank accounts, are seamlessly handled by this app and that too at any time of the day allows banks to spend less on creating new infrastructure while providing an awesome experience.

There are other revenue generating activities which a customer can perform on a banking app with the help of zelle.

 These are value added complimentary banking services like payday loans, insurance, mortgages etc.

Consortium of networked banks also pay a fixed fee to Early warning services, the company that owns Zelle, for maintaining the safety and integrity of the platform. 

The participating banks also happily pay for running of Zelle platform as it helps them fight off competition from new Fintech competitors

 This platform ensures that banks can continue to offer equivalent or better services than these competing P2P apps thereby retaining their customers.

In 2018 Zelle also launched a service where retail users can pay merchants for goods and services using its platform.

Businesses then pay up to 1% as transaction facilitation charges to Visa or Mastercard, which is shared between Zelle and the bank that has issued the card. 

It is expected that in future Zelle app will also carry additional services, which will help it earn some direct revenues from the customers.

 Another source of expected monetization is the launch of its own branded debit and credit cards. 

Early warning services have always maintained that the Zelle app will be available free of any charge to its retail customers. It is not expected that this policy will undergo any change under normal circumstances.

Top Competitors of Zelle App

There are 5 direct competitors to the services offered by Zelle in the US market.


Venmo is a direct competitor to Zelle but is more popular according to opinion polls and surveys etc.

However, the total volume of transactions is higher on Zelle. While Venmo started as a SMS platform to send and receive money, it is now transformed into a social payment app allowing users to pay, split payments and share opinions.

Venmo also lacks direct integration with bank apps.


PayPal is a digital payment service that offers a secure and quick method to transfer money. It claims to have the fastest checkout process.

Square (Cash App)

This app allows users to send money instantly to family and friends. 

The differentiating feature of this app is that the users can integrate with Square’s card reader hardware and POS app for processing the payments anywhere.

Apple Pay

Apple Pay is a digital payment service launched by Apple and available on iOS devices. 

Though it is limited in uses, it still popular with hardcore Apple supports in US>

Google Pay

Google Pay is a contactless payment service on Playstore which can work without internet connectivity. 

It is designed for online checkout and money transfers but is not very popular in America.


Digital payment services like Zelle have been disruptive in nature and have changed the face of financial transactions in personal banking completely. It was a smart move by a consortium of these large banks and credit unions to create a network that allowed them to keep customers on a platform shared by them. 

The ease of transaction offered by Zelle and its integration with multiple banking apps has given it an edge over other such applications resulting in become the highest grossing money transfer app in US.

 The share of transaction charges between Zelle and participating banks has ensured that it keeps providing excellent services to customers without charging them anything extra.

This has been a winning relationship as banks have also saved on a lot of infrastructure cost they would have spent if this digital network was not available.

 The future success of Zelle app will depend upon the additional services that it can bring on the platform and focus on transaction security by detecting fraudulent activities ahead of time.

FAQs -

  1. How does Zelle make money without fees?

    Zelle makes money by facilitating money transactions for customers of the banks. Transaction charges paid by the customer to bank are shared by them with Zelle, which is main source of its revenue. It also allows some value added services on the platform and earns the fee from institutions on such transactions.
  1. Who pays the cost of Zelle?

  2. There is no additional cost paid by a retail customer to Zelle for money transactions. However, if a merchant receives payment for goods and services through this platform, he pays a cost up to 1% to the platform which is shared with the bank.

  1. What is the catch with Zelle?

    Zelle is a managed digital money transaction platform. It is a secure app and continues to evolve ways to detect fraud activities. If someone gains access to your Zelle app and made a payment not authorized by you, you can report it to your bank and they will help resolve it with you.
  1. What percentage does Zelle take?

    Zelle doesn’t charge its users any money for transferring money. The merchants are charged a fee at 1% of transaction amount if they use the platform to receive money. This money is shared between the bank and Zelle.

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