A new real-time person-to-person payments network dubbed Zelle will see major banks and other financial institutions in the United States sign up in a direct attempt to rival the popular PayPal-owned Venmo platform and catch up with other Fintech startups like Circle.
Fundamentally, the system enables users to send and receive money among each other using an e-mail address or a mobile phone number. Zelle will gain a presence as a public consumer application that will see compatibility among several large and prominent U.S. banks.
Although details are currently scarce, Zelle will replace an clearXchange, a bank-owned platform and joint-venture created by three of the biggest U.S. banks in JPMorgan, Bank of America and Wells Fargo, in 2011.
Early Warning, the bank-owned entity that operates clearXchange revealed that Zelle (taken from ‘Gazelle’) will replace clearXchange next year following its launch in early 2017.
In an interview with Bloomberg, Early Warning CEO Paul Finch stated:
The CEOs of these banks got together and said ‘It’s time to make this real.
The current list of participating banks are: Ally Bank, Bank of America, Bank of the West, BB&T, BECU, Capital One, Citi, Fifth Third Bank, FirstBank, First Tech Federal Credit Union, Frost Bank, JP Morgan Chase, Morgan Stanley, PNC, USAA, U.S. Bank and Wells Fargo.
Cryptocurrency and blockchain observers will notice several of those banks have and continue to experiment with blockchain technology in payments and other areas of finance, with bitcoin’s underlying innovation.
Banking Industry to (Finally) Go Instant
According to Reuters, Zelle will be splashed across the websites and applications belonging to the biggest U.S. banks, setting the platform as the chosen standard among the participating banks for digital payments.
Finch further revealed that the buttons used on the applications at the users’ end will also feature the same design across several banks, as a part of the concentrated effort to make Zelle ubiquitous by the banks.
With the 19 participating financial institutions, Zelle is estimated to enable 76 million mobile banking customers at launch, Early Warning revealed. That number constitutes to about 65% of checking and savings accounts in the U.S. In looking to completely bombard 2017 with Zelle, Finch added that the platform’s agreements with debit card networks, payment companies and other financial institutions will mean 90% to 95% of all saving and checking accounts will be offered Zelle.
Speaking at the Money 20/20 payments industry conference in Las Vegas, Finch confirmed that Zelle would open its doors to all U.S. banks and credit unions.
This is about creating a wide, and inclusive, alternative to cash and checks for everyone.
As stated above, details remain scarce and it is currently unknown if Zelle will charge fees for money transfers among users with checking or savings accounts. Its primary competitor Venmo charges a 3% fee for sending money with a credit card, while no charges apply for money transfers from a bank account or a debit card. Bitcoin startup Circle which has gained notable prominence in the peer-to-peer money transfer space follows a similar fee structure, with no charges for debit card payments and applicable fees for credit card users.
Images from Zelle and Shutterstock.