What Many Are Missing About Zelle

There can be value in taking a contrarian point of view. It creates a dialogue, generates diversity of thought and battles the pack mentality that can often take hold in business. Still, overt skepticism – especially when it comes to the promises of emerging technologies in payments – is as risky as over-optimism.

Take Zelle, for example. The P2P platform continues to surpass all expectations for growth. There are several factors contributing to the steady in-roads Zelle is making with issuers and consumers. Each proves that disruption in payments is a fast-moving train – one financial institutions will be better off boarding than ignoring.

It’s growing fast. In its first year, Zelle saw 320 million transactions totaling more than $94 billion. That’s all money staying within the traditional banking system, not dropping off and into the accounts of third-party payment and social apps.

It’s already on the phone. According to reporting by Early Warning Services in July, Zelle reaches more than 100 million consumers through mobile banking apps and millions more through the standalone Zelle app. Today, 32 financial institutions are live on Zelle, with an additional 149 under contract, representing more than 56% of the U.S. Demand Deposit Account market.

It’s seamless. Zelle links existing bank accounts in the U.S., allowing users to send money directly from their accounts to the accounts of their friends, even if they bank at different financial institutions. There’s no need to transfer funds in and out of a separate app, or share debit and credit card information with yet another third party.

It’s fast. Zelle transactions happen typically in minutes as long as both parties are registered.

It’s democratized. The goal of Zelle is to bring P2P capability to all U.S. consumers through their financial institutions that they know, trust and with whom they already have established relationships. The nation’s credit unions and community banks, of all sizes, are capable of integrating Zelle into their digital wallet strategy. CO-OP Financial Services is in implementation discussions with approximately 50 credit unions, and a majority of our 3,000 credit union clients have expressed interest in Zelle.

It’s layered. Fraudsters always look to exploit new models, putting all digital wallets high on the radar. But what many people forget is that consumers who use Zelle enjoy the same fraud protection efforts and liability policies they are accustomed to from their bank.

CO-OP’s research indicates a direct link between primary financial institution status and a strong payments strategy. It’s why we advise credit unions to offer as many different ways to pay as possible. P2P is growing in demand, and the solutions that only work within a credit union’s existing membership miss a major opportunity to promote themselves and their brand to prospective members. As consumers increasingly expect seamless connections between the digital brands they love (Apple, Google, Facebook … and perhaps one day, Zelle) the credit unions capable of providing that will have a massive competitive advantage.

Todd Clark is President/CEO for CO-OP Financial Services. He can be reached at 909-948-2500.