Fintech

Zelle isn’t as cool as Venmo. That’s not stopping its growth.

Zelle’s payments volume jumped 59% in 2021 as more consumers turned to digital money transfers during the pandemic.

Zelle logo on a smartphone

After years of efforts, Zelle is part of a larger growth of real-time payments in the U.S.

Photoillustration: Thiago Prudencio/SOPA Images/LightRocket via Getty Images

The maker of Zelle saw a spike in usage of the real-time payments service in 2021, with more people using it for business payments.

Early Warning Services, the bank-owned company which operates Zelle, processed 1.8 billion payments in 2021, up 49% from 2020, with a value of $490 billion, up 59% annually, it reported Wednesday.

Early Warning represents banks’ interest in bringing a more modern form of financial services to consumers — its owners include Bank of America, Capital One, JPMorgan Chase, U.S. Bank and Wells Fargo.

After years of efforts, Zelle is part of a larger growth of real-time payments in the U.S. The Clearing House’s RTP network launched in 2017, and did 37.8 million transactions valued at $15.7 billion in the fourth quarter of 2021. It’s open to all federally insured U.S. depository firms. (Zelle uses RTP for some of its transactions.) And the Federal Reserve is aiming in 2023 to launch FedNow, its own real-time payments service, for which it just revealed pricing and credit limits.

The slow if steady progress comes as other countries have leapt far ahead of the U.S. in real-time payments: India, China and South Korea are notable examples.

If the U.S. is going to catch up, the Zelle service may play a big role. It’s now ubiquitous in the banking apps and websites that consumers use everyday — close to 10,000 financial institutions (up 3,000 from a year ago) now use Zelle either through a banking app or by using their debit cards with the Zelle app. Most consumers use Zelle on mobile devices, said Al Ko, CEO of Early Warning.

The Zelle app is a way for consumers to send Zelle payments if their bank doesn’t yet have a Zelle integration. But Early Warning is not looking at its app to compete with other payments apps. It’s more designed as a placeholder until banks are connected to Zelle, Ko said. After a bank adds Zelle, consumers are asked to switch to their bank’s app. That’s a key difference between Zelle and fintech apps like PayPal, Venmo or Block’s Cash App.

While the “overwhelming majority” of Zelle’s payments are peer-to-peer, there’s an increasing use of the service for businesses, Ko said. The average transaction size in the fourth quarter of 2021 was $272, which indicates more use for paying small businesses, he said.

“Banks are thrilled by it, because it's just engagement with their app that's just everyday useful, and people prefer that it's tied to the checking account, and then people prefer it because it's an app they already use,” Ko said.

Zelle is also working on a QR code feature that allows people to pay businesses, which is being used now on a limited basis but is not rolled out completely. That would mean consumers would not have to ask for a business’ email address or phone number to pay.

Zelle’s transfers move in three ways. They’re mainly done via ACH but more are increasingly moving through RTP. If a customer opts to connect their debit card through the Zelle app, it will move over Visa rails; that’s a relatively small number of transactions. But regardless of how it moves, for consumers, the transfer happens in seconds, even if it takes longer for banks to settle, Ko said.

Fintech

Gavin Newsom shows crypto some California love

“A more flexible approach is needed,” Gov. Newsom said in rejecting a bill that would require crypto companies to get a state license.

Strong bipartisan support wasn’t enough to convince Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.

Photo: Jerod Harris/Getty Images for Vox Media

The Digital Financial Assets Law seemed like a legislative slam dunk in California for critics of the crypto industry.

But strong bipartisan support — it passed 71-0 in the state assembly and 31-6 in the Senate — wasn’t enough to convince Gov. Gavin Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

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James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Workplace

Slack’s rallying cry at Dreamforce: No more meetings

It’s not all cartoon bears and therapy pigs — work conferences are a good place to talk about the future of work.

“We want people to be able to work in whatever way works for them with flexible schedules, in meetings and out of meetings,” Slack chief product officer Tamar Yehoshua told Protocol at Dreamforce 2022.

Photo: Marlena Sloss/Bloomberg via Getty Images

Dreamforce is primarily Salesforce’s show. But Slack wasn’t to be left out, especially as the primary connector between Salesforce and the mainstream working world.

The average knowledge worker spends more time using a communication tool like Slack than a CRM like Salesforce, positioning it as the best Salesforce product to concern itself with the future of work. In between meeting a therapy pig and meditating by the Dreamforce waterfall, Protocol sat down with several Slack execs and conference-goers to chat about the shifting future.

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Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

LA is a growing tech hub. But not everyone may fit.

LA has a housing crisis similar to Silicon Valley’s. And single-family-zoning laws are mostly to blame.

As the number of tech companies in the region grows, so does the number of tech workers, whose high salaries put them at an advantage in both LA's renting and buying markets.

Photo: Nat Rubio-Licht/Protocol

LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.

But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.

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Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

Policy

SFPD can now surveil a private camera network funded by Ripple chair

The San Francisco Board of Supervisors approved a policy that the ACLU and EFF argue will further criminalize marginalized groups.

SFPD will be able to temporarily tap into private surveillance networks in certain circumstances.

Photo: Justin Sullivan/Getty Images

Ripple chairman and co-founder Chris Larsen has been funding a network of security cameras throughout San Francisco for a decade. Now, the city has given its police department the green light to monitor the feeds from those cameras — and any other private surveillance devices in the city — in real time, whether or not a crime has been committed.

This week, San Francisco’s Board of Supervisors approved a controversial plan to allow SFPD to temporarily tap into private surveillance networks during life-threatening emergencies, large events, and in the course of criminal investigations, including investigations of misdemeanors. The decision came despite fervent opposition from groups, including the ACLU of Northern California and the Electronic Frontier Foundation, which say the police department’s new authority will be misused against protesters and marginalized groups in a city that has been a bastion for both.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

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