“We heard you needed a better way to pay,” is the slogan of new payment network, Zelle. Zelle states that its partnership with U.S. banks is what sets it apart from payment systems currently on the market such as Venmo, Paypal, Square Cash, and others. Over 86 million mobile banking customers will have access to Zelle and will have the ability to move funds from user to user, bank to bank. This person-to-person payment method will function similarly to money exchange applications like Venmo – a preferred currency among millennials – but will differ in its ability to eliminate the time these systems require to shift funds between bank accounts, putting an end to overnight transfers. Since banks will link to each other via Zelle, this simpler transfer model may prove to be the most significant change yet in digital money exchange.
The industry consortium Early Warning Services LLC, composed of JP Morgan, Bank of America, Capital One Financial Corp, and U.S. Bancorp developed this service, and the consortium currently manages the network. Early design efforts resulted in the venture clearXchange, which the consortium eventually rebranded as a more consumer-friendly Zelle. Chief Executive of Early Warning, Paul Finch, stated, “Fragmentation has been frustrating for consumers…Inconsistent experiences have made it difficult to send and receive money between banks.”
Thirty-three banks are backing Zelle as of now. Customers no longer have to download an additional app for money sharing, as they can transfer funds through their own mobile banking apps. Bill Wallace, head of digital at JPMorgan Chase & Co, asserted, “By coming together to offer Zelle, we are providing a large majority of Americans with a safe, fast and easy way to move money.” The user can receive or send money in a matter of seconds, and only needs either the email or phone number of other users. The consortium allows its partnered banks to assign their own fees for Zelle (take for example Venmo’s 3 percent charge on credit card payments), but Early Warning has not yet made public the charge – if any – for users sharing payments between banks.
Its strategy relies on the technology’s ubiquitous and accessible nature. Gareth Gaston, the head of omnichannel banking at U.S. Bank said, “We are excited to bring the service to everybody and anybody, regardless of which brand of phone you have in your hand or which generation you belong to.” Similarly, Michael Moeser of the financial industry research firm Javelin Strategy stated, “Nearly all banked Americans will be able to access this.” Early Warning strips Zelle of some of the defining social features within money sharing, like Venmo’s public or private emoji-filled payment feed. Moeser thinks digital money transfer is not addressing a wide populace,
There’s a huge population of consumers, particularly those over 45, who haven’t used mobile payments yet. It’s a hurdle for people — maybe they don’t want to download an app, or mess around with settings. But once people try it a couple of times, and see ‘wow, it worked!’ they tend to get over that hurdle and love it.
The modern world is increasingly digital, with little to no room for cash, which is “the common enemy,” according to a Venmo spokesperson. Finch made a recent statement about the launching of the network, “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.” This streamlined technology, set to rollout this summer (customers should check with their banks, as the arrival of Zelle may occur at varying times) has the potential offer consumers an easier option for personal money exchange.
Read more here – “U.S. banks launching answer to peer-to-peer payment app Venmo,” (David Henry and Anna Irrera, Reuters)