What is Zelle and how does it work? – Forbes Advisor

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Along with PayPal, Venmo and other popular mobile payment options, Zelle is a peer-to-peer (P2P) payment solution that can speed up payments between you and your friends and family or help you manage payments more efficiently. of your small business, all without paying fees.

Before you start using Zelle, it’s helpful to understand how it works so you can incorporate it into your finances.

Here’s what you need to know before sending or receiving your first payment.

What is Zelle?

Zelle is a payment network that lets you easily, quickly, and securely send money from your bank account to someone else’s bank account.

Zelle transactions usually only take a few minutes, and anyone using the platform can send and receive money at no cost.

In 2021, Zelle users sent $490 billion across 1.8 billion transactions, and nearly 3,000 financial institutions joined the Zelle network.

How does Zelle work?

Zelle uses the Automated Clearing House (ACH) payment system to expedite payments between US bank accounts. Although you can initiate an ACH payment to a friend from your bank account, this transfer can take three days to process. With Zelle, your money arrives in minutes.

How to configure Zelle

You can access Zelle in two ways: through your financial institution or by using Zelle directly.

How to set up Zelle through your financial institution

You can access Zelle through your bank’s website or mobile app. Once logged in, follow the instructions to register your account with Zelle.

Or, depending on your bank, you may be able to sign up through Zelle’s own app using your bank username and password.

How to configure Zelle directly

If your bank doesn’t offer Zelle payments, just set up Zelle directly through their mobile app. Download the Zelle app and follow the instructions to create a new username and password. Don’t worry, you won’t have to enter your sensitive banking information.

How to send money with Zelle

Once your account is set up, it’s easy to start sending money with Zelle. It takes a few simple steps.

1. Decide who to pay

Zelle is the best way to send payments to people you know and trust, like your friends or family. For example, if you went to dinner with friends and you want to reimburse one of them for your meal, you can use Zelle to send $50 to your friend. You can also use Zelle with certain service providers or small businesses, such as babysitters, lawn care professionals, and hairdressers.

2. Enter the recipient’s email address or phone number

You can use Zelle to send money to anyone with a US bank or credit union account. All you need is the email address or US mobile number associated with their Zelle account.

3. Decide how much to send

Zelle will ask you how much you want to send. Just enter a number that’s within your weekly send limit, and you’re good to go.

4. Send the money

Once you click “send”, your payment is on its way. If your friend or family member is already using Zelle, the money will arrive in their bank account within minutes. If they haven’t already registered, they’ll receive a text or email explaining how to claim payment.

How to Cancel a Zelle Payment

The only way to cancel a Zelle payment is if the recipient has not yet signed up for Zelle. If the recipient is already a Zelle user, the payment goes directly to their bank account and cannot be reversed.

If a payment can be reversed, log in to Zelle through your bank’s app or website. Next, navigate to your account activity page. Select the payment you want to cancel and select “Cancel this payment”.

How to receive money from Zelle

To receive money from Zelle, you simply need a Zelle account. If you already have an account with your bank or credit union, you don’t need to do anything else. Any payment sent to you through Zelle will be automatically deposited into your linked bank account.

If you don’t already have a Zelle account or if your financial institution doesn’t offer Zelle, you can download the app and create an account. It may take up to three days for your first payment to be received. However, future payments should arrive in your bank account within minutes.

Which banks use Zelle?

The list of banks that have adopted Zelle continues to grow. In 2021, Zelle reported that nearly 10,000 banks and credit unions across the United States were part of its payment network.

The type of banks that offer Zelle to their customers range from small local banks and digital banks to large national banks with branches all over the country.

Who owns Zelle?

Zelle is a product of Early Warning Services, LLC, a fintech company owned by seven of America’s largest banks: Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, US Bank and Wells Fargo. Since Zelle was created by banks for banks, its goal is to help financial institutions of all sizes deliver digital payment functionality that benefits both customers and a bank’s bottom line.

What are Zelle’s transfer limits?

Zelle transfer limits are set by your financial institution or Zelle directly.

To give some examples:

  • Bank of America customers have a maximum transfer limit from Zelle of $3,500 per day.
  • Hunt Personal checking account customers can send up to $2,000 in a single Zelle transaction and up to $2,000 per day. Higher transfer limits are available for Chase banking customers “private customers” and business checking account holders.
  • Wells Fargo limits established customers to send $3,500 in daily Zelle transfers, and it may impose a lower limit for customers who are new users.

If your financial institution doesn’t offer Zelle, you can still use the Zelle app to send up to $500 per week.

Is Zelle safe?

Zelle is generally considered a safe and secure way to send money because Zelle transactions don’t require you to share sensitive financial information. Additionally, your bank or credit union should have authentication and monitoring capabilities to ensure that you are the person authorizing your Zelle payments.

Zelle is fast, convenient and free and works the same way as cash. But Zelle doesn’t have the same payment protections people expect from credit or debit cards, which typically protect consumers from fraudulent charges. For these reasons, Zelle should only be used to pay people you know and trust: friends, family, and some small business owners.

Don’t use Zelle to buy from online sellers or send large sums of money to people you don’t know well. And make sure you have the correct mobile phone number or email address of the person you want to pay. This helps ensure that your money will be sent to the correct person.

Conclusion

Zelle gives you the power to send and receive money quickly and for free, even if you’re banking in a location that doesn’t offer Zelle to its customers. With just a few clicks, you can pay off friends or pay your favorite hairstylist without ever having to share sensitive banking information. Although there are limits on the amount you can send, the money you transfer will arrive safely and in minutes, a definite advantage in the world of P2P payments.

Frequently Asked Questions (FAQ)

Why is my Zelle payment pending?

A Zelle payment may be “pending” if the payment recipient has not yet registered with Zelle. The recipient will need to use their mobile phone number or email address to create a Zelle account and claim payment.

Is there a way to increase my Zelle limit for sending money?

To increase your Zelle limit, contact your financial institution. Limits can be determined by the type of account you have, or they can be universal for all bank customers. If your bank doesn’t offer Zelle and you use the app to send and receive money, your weekly sending limit is $500 and there’s no way to request an increase.

Can I use Zelle for my small business or to pay a small business?

Yes. Zelle can be a great way to get paid as a small business owner because it’s fast and there are no fees. If your customers’ payment amounts don’t exceed their daily Zelle transfer limits, you can encourage them to pay you through Zelle, delivering money to your bank account faster than a check or ACH transfer.

However, if you’re considering using Zelle to pay a small business owner for products or services, keep in mind that Zelle doesn’t offer the same payment protections as a credit or debit card. If you are unhappy with the product or if the company engages in fraudulent practices, you may not have the same chance of getting a refund for a Zelle payment. So be sure to only use Zelle with small businesses and service providers you know and trust. If you want greater security protection, use a credit card to make your payment.

Can I use Zelle if I don’t have a smartphone?

If your bank or credit union offers Zelle, you can use their online banking website to send or receive Zelle payments, even if you don’t have a smartphone. However, if your institution does not offer Zelle, and you do not have a smartphone to download the Zelle mobile application, you will not be able to use Zelle.


Maria D. Ervin