Zelle is a peer-to-peer money transfer app that allows users to move funds from one bank account to another. It’s among a growing number of mobile payments apps that allow you to pay another person with the click of a button, even if they have an account at a different bank.
Unlike competitors such as Venmo, PayPal, and Cash App, Zelle does not charge an extra fee for an instant transfer.
Learn more about how Zelle works and its advantages and disadvantages.
Key Takeaways
- Zelle is a money transfer app that allows you to send money to family or friends quickly.
- More than 1,700 banks include Zelle in their banking app.
- Unlike many money transfer apps, Zelle does not charge a fee for instant transfers.
- Zelle transfers are generally secure, but the app does carry risks, including the risk of glitches at banks that can affect money transfers.
How Zelle Works
Zelle is a money transfer app that helps you quickly send money to family or friends through your mobile device. More than 1,700 banking apps already offer Zelle.
You enroll through the Zelle app or through your banking app, if it offers Zelle’s service. Then, you can find a person whom you want to pay by entering their email address or phone number. Finally, choose the amount of money you want to send, and the recipient will get instructions on how to receive the payment quickly.
Zelle is owned by Early Warning Services, a financial technology (fintech) owned by seven major banks: Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo. It launched in 2017 to compete with the likes of PayPal and Venmo, both of which are owned by PayPal Holdings Inc. (PYPL), and Cash App, owned by Block Inc. (SQ).
The amount of money you can transfer will depend on the transfer limit of your bank account. If your bank does not provide Zelle’s service, the weekly transfer limit is $500 and you cannot request an increase.
Example of How Zelle Works
Zelle works similarly to other mobile payment apps. For example, if you went out to a restaurant with a group of friends and wanted to split the bill, one friend could pay. You and your other friends could use Zelle to send your share of the bill to the person who paid.
Instead of receiving cash, your paying friend would receive money directly deposited in their bank account. With Zelle, they would receive the funds within minutes and would not have to wait a few days for the payment to process.
Advantages and Disadvantages of Zelle
Zelle’s benefits include providing a convenient way to transfer money within minutes for no fee. Mobile payment services reduce the need to carry cash, which can lower the risk that your money will be stolen.
However, Zelle does have some downsides to keep in mind. For one, even though Zelle is generally safe—it uses authentication and monitoring features to protect your funds—users have experienced trouble with transfers, such as from a bank outage. Also, if a transaction goes wrong, Zelle currently does not provide the payment protection that credit cards typically do.
Is Zelle Safer Than Venmo?
Zelle and Venmo are both generally safe money transfer apps, as they use authentication, encryption, and monitoring features to make transfers secure.
What Are the Disadvantages of Using Zelle?
Disadvantages of using Zelle include the potential for fraud or theft. Users can also face difficulties, such as not receiving their funds if the app or banks experience technical problems. Outages can affect money transfers. You also cannot cancel a payment that’s received by another user, and transfers occur quickly.
Do You Need a Bank Account for Zelle?
You need to have a U.S. bank account to use Zelle. A recipient also needs to have a U.S. bank account, but it does not have to be with the same bank as the sender’s account.
Does Zelle Charge a Fee?
Zelle does not charge a fee for sending or receiving funds. Some banks or credit unions may charge for this service. You should confirm with your financial institution whether or not it charges for Zelle’s service.
The Bottom Line
Zelle can provide a fast and convenient way to send money to another person, no matter which bank they use. Unlike many of its competitors, Zelle provides instant money transfers with no fees, so you can send and receive funds more quickly.
However, like with any technology, Zelle users could potentially encounter glitches from the app or banks that can affect their payments. Weigh the pros and cons, including any associated fees, before using any money transfer app.
FAQs
Example of How Zelle Works
Does Zelle need my bank account? ›
To set up Zelle, all you need is a bank account. You can access the service either through your financial institution's mobile app or website or through Zelle directly. You can enroll using your email address or phone number — this will be the information other users will need to send you money.
What is the downside of using Zelle? ›
Limited Social Interaction. Unlike some of its competitors, Zelle lacks social elements, making it less suitable for users who prefer a more interactive and socially connected payment experience.
How does Zelle actually work? ›
You can send, request, or receive money with Zelle®. After you've enrolled, simply add your recipient's email address or U.S. mobile number, the amount you'd like to send or request, review and add a memo, and hit “confirm.” In most cases, the money is typically available in minutes1.
Do people see your bank account with Zelle? ›
No sensitive account details are shared when you send and receive money with Zelle® – only an email address or U.S. mobile number tied to a bank account in the U.S. Authentication and monitoring features are in place to help make your payments secure, but, pay it safe: Only use Zelle® with people you trust, and always ...
Can I set up Zelle without a bank account? ›
Zelle requires a bank account to send and receive money, but you may be able to sign up with select prepaid Visa or Mastercard debit cards. Unfortunately, not all prepaid debit cards will work with Zelle, but you'll have the best luck with cards that requires a phone number, billing address, and email address.
Is Zelle safer than Venmo? ›
Both of the payment services are decently safe, have user-friendly interfaces, and allow you to conveniently send money when you need it. Zelle stands out from Venmo with its absence of instant transfer fees, but it also cannot be used as a wallet. So, if you need a wallet function, you should go for Venmo .
What banks do not use Zelle? ›
Some notable financial institutions that NerdWallet has reviewed and that don't participate directly in the Zelle network include Alliant Credit Union, American Express, Barclays, Connexus Credit Union, LendingClub Bank, Marcus by Goldman Sachs, Pentagon Federal Credit Union, SoFi and Synchrony Bank.
Does Zelle charge a fee? ›
Are there any fees to send money using Zelle®? Zelle® doesn't charge a fee to send or receive money. We recommend confirming with your bank or credit union that there are no fees for Zelle® transactions.
When should you not use Zelle? ›
Only Send Money to Those You Trust
With Zelle®, you can send money from your account to someone else's within minutes1. It's a great way to pay friends, family, your coworkers and almost anyone else you trust, but it shouldn't be used to pay strangers.
If you use Zelle's app, you'll want to make sure you're connecting your credit card to the app rather than your debit card. This is because credit cards offer better fraud protection than debit cards which keeps your money safe even if you were to fall for a scam.
Will Zelle refund money if scammed? ›
How to Get Your Money Back. Zelle is processing each scam claim they receive on a case-by-case basis. If you haven't already done so, file a claim directly with Zelle through their app or by phone (844-428-8542). You'll also need to file a claim with the bank or credit union your funds were taken.
Can you send Zelle to someone who doesn't have it? ›
What if the person I'm sending money to hasn't enrolled with Zelle®? If the person you're sending money to hasn't enrolled yet, they'll receive an email or text notification letting them know you've sent them money. They'll be guided through a few simple steps to get enrolled.
What is a standard payment on Zelle? ›
Standard Delivery: Funds will be deducted from your account immediately after you initiate the transaction. Future-dated and recurring Standard Delivery: Funds will be deducted from your account on the business day the payment is scheduled to be initiated.
How to pay someone with Zelle? ›
How to send money with Zelle ®
- ACCESS ZELLE® Get started by enrolling your email or U.S. mobile number through your mobile banking app or with the Zelle® app.
- PICK A PERSON TO PAY. Enter the preferred email address or U.S. mobile number of the recipient. ...
- CHOOSE THE AMOUNT. Enter the amount to send.
Generally speaking, accepting Zelle payments from strangers is risky business, as it can open you up to some of the scams above. Still, if you're making a purchase from a stranger that you've deemed trustworthy, it shouldn't be a problem. Just don't send any money back to them if they claim, “something went wrong.”
Does Zelle report to the IRS? ›
Zelle doesn't report to the IRS for business or personal use of its platform. Technically, it doesn't count as a third-party payment network, so the usual reporting requirements don't apply to it. In addition, personal transactions on a third-party payment network are never taxable.
