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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.


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