Hot on the heels of Apple’s announcement of a new iMessage based payment processing framework to help Apple’s customers move money from person-to-person, a new bank-backed solution called Zelle was announced by Early Warning Services. The new Zelle system will be available to approximately 86-million mobile banking customers through their bank specific apps. Zelle promises to make it possible to transfer funds from one account to another in a matter of minutes as opposed to current systems that typically take 1-2 days for funds to clear and be available.
According to their announcement, Zelle will start rolling out this week and continue over the next 12 months through more than 30 financial institutions that are participating. Some of the banks that are incorporating Zelle include Bank of America, Capital One, Citi, Fifth Third Bank, JP Morgan Chase, Morgan Stanley, PNC Bank, TD Bank, USAA and Wells Fargo. Early Warning Systems is also working payment processors like FIS and Fiserv to be able to make Zelle available to smaller community banks and credit unions.
Early Warning Systems’ CEO Paul Finch notes that “Zelle unites the financial community behind a single, real-time P2P payments experience for millions of consumers. Together, we are removing friction from finance, allowing money to move seamlessly between accounts in minutes.”
To transfer funds to another person’s account, users will only need to know an email address or phone number. If for some reason a person’s financial institution is not participating with Zelle, they will be able to use a standalone Zelle app to be released in the coming months. Thanks to partnerships with MasterCard and Visa, customers should be able to transfer money to anyone who has a U.S. based debit card.
According to research, in 2016 $55 billion in P2P transactions were processed just on the existing Zelle network. As 2017 opens, Zelle has already experienced a 39% year-over-year growth rate. Besides making it a lot easier to divide up the tab at the local restaurant, there is a huge market for banks to potentially tap into with the growth of P2P payments.