Maybe your firm can now use Zelle to make payments

In this blog article I said “Zelle cannot be used by a business”.  Recently, however, some banks that belong to Zelle, which is a money transfer service, have begun allowing businesses to use Zelle.  This article discusses this change.

Main potential benefits of Zelle are that:

  • it is (generally) free of charge to the sender;  and
  • it is free of charge to the recipient;  and
  • transfers are (generally) instantly received by the recipient.

I say “generally” free of charge because apparently a bank that joins the Zelle system is not obligated to make the service free of charge.  But I am not aware of any bank that actually charges the sender or recipient for sending Zelle money transfers.

I say “generally” instant because any time I have ever seen two users of Zelle send money from one to the other, the transfer has always been instant.  There are two ways that a Zelle transfer might not be instant:

  • the recipient might not yet be subscribed to Zelle, or
  • the recipient is subscribed to Zelle, but the recipient’s bank is connected to Zelle in a way that is not instant (ACH transfers get used instead of instant transfers).

I am not aware of any bank that is connected to Zelle in a non-instant way.

Main limitations of Zelle include:

  • It can only be used within the US.
  • Not all banks in the US participate in the Zelle system.
  • There is always some limit set by the sender’s bank as to the number and dollar volume of permitted transfers.
  • There might also be a limit set by the recipient’s bank as to the number and dollar volume of permitted transfers.

For the first many years that Zelle existed, it was only available for personal bank accounts, not business bank accounts.  By this I mean that the sender was limited to be the owner of a personal bank account, not a business bank account, and the recipient was likewise limited to be the owner of a personal bank account, not a business bank account.  

The main point of this blog article is to draw attention to the recent change which is that some banks have now (presumably somewhat reluctantly) chosen to allow owners of business bank accounts to use Zelle.

Why do I say “somewhat reluctantly”?  The thing is that before Zelle happened, many banks had money transfer services that cost money — that earned fees for the bank.  And Zelle of course has the great drawback (from the fee revenue point of view) that the bank does not earn any fees from the customer.  

But traditional bricks-and-mortar banks are, I suspect, running scared because of the many new startups that are nipping at their heels.  Services like Venmo and Paypal provide domestic US money transfers that compete with banks.  Services like TransferWise provide international money transfers that compete with banks.  New internet-based banks like N26 compete head-on with traditional bricks-and-mortar banks.  All of these things probably make the traditional bricks-and-mortar banks feel that the way to go is “if you can’t beat ’em, join ’em”.

Anyway, the development is that some traditional bricks-and-mortar banks have not only cannibalized their money transfer fee revenue for their personal customers through Zelle, but are also cannibalizing their money transfer fee revenue for their business customers through Zelle.  I learned about this from alert blog reader Rick Neifeld.

Wells Fargo, for example, now allows businesses to send money through Zelle.  But it does not allow businesses to receive money through Zelle.

Bank of America, for example, now allows businesses to send and receive money through Zelle.  

Again one must keep in mind that there is always some limit set by the sender’s bank as to the number and dollar volume of permitted transfers.  And one must keep in mind that there might be some limit set by the recipient’s bank as to the number and dollar volume of permitted transfers.  

Have you tried using Zelle with your business?  Does your bank allow you to use Zelle with your business bank account?  If so, which bank is allowing you to use Zelle with your business bank account?  Does your bank charge you a fee to send Zelle transfers?  Please post a comment below.

6 Replies to “Maybe your firm can now use Zelle to make payments”

  1. Chase and Bank of America allow me to use Zelle to send from my Chase business operating account to my Bank of America personal checking account. No fee for the transfer, but the amounts are limited. And Zelle only works if both parties are registered to Zelle.

  2. For more than four years Zelle has been useful for transferring funds into and out of my Chase acct., including receiving from B/A and WF. Payments sent by clients often arrive within seconds. So I’m a “zellous” enthusiast.

    Actually Zelle evolved from branded offerings by the several big banks (e.g., “Chase QuickPay”) each having been provided by ClearXchange’s p2p service, which merged into Zelle when it was launched about two years ago. BUT unless things have changed fairly recently, one needs to be aware of a few issues:
    (0) SECURITY- see (4) below;
    (1) As Carl says, Zelle can send to non-member banks. But transfers can take 1 or more days, once your recipient enroll has enrolled).

    (2) A year or two ago it seemed that transfers from WF of more than $2000 or $2500 would be delayed overnight, or even for the weekend. Not clear if this was a restriction on my client, or a general rule.

    More generally, experiences of clients at WF and other member banks (“Zbanks” below) reveal vagueness about sending limit$. For an example that’s typical of clients’ various banks, see this FAQ from City National Bank (my other bank; it “Zellefied” only recently) suggesting much depends on a bank’s experience with its client.

    (3) Some useful comments here re other potential issues (note: I have no knowledge of the site’s cred’s):

    (4) SECURITY ISSUES (unless lately improved): Other than the electronic transmission per se, Zelle leaves security up to you. E.g., as happened to a friend, if someone gains access to the bank acct you have linked to Zelle, they can send funds to anyone who has a Zelle enabled acct. If to a Zbank, the money’s almost certainly gone because your acct is debited immediately. If to a non-Zbank, perhaps the delay in debiting allows your Zbank to cancel the transmission, assuming you discovered the problem in time to ask. More about such concerns and flaws in this NYT article from Spring 2018:

    (5) All that said, I continue to find Zelle useful. For more history see wikipedia.

    (6) Fwiw, I’ve not used Zelle from a phone, only a desktop.

  3. I have been using Zelle for over a year now with my law firm operating account at Chase. Chase does not charge me a fee. I think it’s fantastic. My main use is to receive payments from clients. I generally send my bills out on the morning of the first business day of the month. I have clients who will Zelle me payment before noon on that same day.

    I have noticed that some clients have daily limits of varying amounts. So sometimes they will pay me in multiple Zelle transfers spread over one or more days. I have no issue with this.

    I’d like to know more about the security issue mentioned in point 4 of Michael’s post.



  4. I haven’t really studied it but clearly if an evildoer gains access to you Zenabled account, you’re toast, at least up to the bank’s daily limit each day until you discover the problem. The simplest preventive measure might be to simply have a separate account for Zelle use. Fund it from your regular account shortly before sending to others and draw it down when funds some in.

    I’ll venture that the biggest problem is for people who fall for some scam offer and pay with Zelle since the transaction isn’t reversible. If the Z-loss didn’t involve you, then the bank is obligated to cover it, according to

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