Last week at WWDC, Apple announced a new feature coming to Apple Pay that will let iOS users pay one another directly within Messages, placing the funds in a new "Apple Pay Cash" card that can then be transferred to a bank account or spent anywhere Apple Pay is supported. In addition to current competitors in the peer-to-peer payments space, including Venmo and Square Cash, a coalition of five U.S. banks are this week launching support for a new P2P payments service that promises speedier fund deposits, and support coming from more banks in the future.
The service is called "Zelle," and it will be rolled into the apps and websites of the banks supporting it, which will begin with JPMorgan, Bank of America Corp, Wells Fargo, U.S. Bancorp, and Capital One (via Reuters). Another two dozen banks and credit unions are predicted to join Zelle over the course of the next year. Zelle was originally announced last October.
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Zelle's supporters are focusing on its ability to deposit funds "in minutes" into a friend's bank account, using only an email address or phone number, "because the banks are finally linking to each other." Apps like Venmo and Square Cash normally take up to one day to transfer money into a bank account, with potential for instant transfers available at additional costs.
The long-awaited network will allow tens of millions of bank customers to send money to each other instantly - known as person-to-person payments - with a few taps on their smartphones. That is an improvement over Venmo, which immediately alerts users that a money transfer is in progress, but takes time to shift funds between bank accounts.
"By coming together to offer Zelle, we are providing a large majority of Americans with a safe, fast and easy way to move money," said Bill Wallace, head of digital at JPMorgan Chase & Co (JPM.N), the biggest U.S. bank by assets.
Zelle was created by an industry consortium called Early Warning Services, whose CEO Paul Finch also cited payment service fragmentation as a major frustration for customers. Besides Venmo and Square Cash, even Facebook, Snapchat, and Google have their own peer-to-peer payments solutions, which Finch references as "inconsistent solutions."
“Fragmentation has been frustrating for consumers. Inconsistent experiences, have made it difficult to send and receive money between banks,” said Paul Finch, Chief Executive Officer, Early Warning Services. “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. This revolution in money movement will create for consumers a viable alternative to checks and cash.”
The banks supporting Zelle "are being careful not to confuse customers" with the introduction of another payments app, so it's said that a company like Chase will slowly introduce Zelle into its existing QuickPay app, calling it "QuickPay with Zelle." Later in 2017, Zelle will also allow customers with banks that don't connect with the service to use its instant payment features by pairing an upcoming Zelle app with a Visa or Mastercard debit account.
Zelle has a full list of banks and financial institutions launching support for the service, although it hasn't detailed which will be available first beyond the five banks mentioned today, and encourages users to check with their financial providers for more information.
Apple's own peer-to-peer payments solution will launch alongside iOS 11 this fall.
Top Rated Comments
(View all)how is this different than square cash?
The main difference to services like Venmo and Square is that you don't need another account, and then transfer money to your bank when you want to cash out. The transactions go directly from the sender's to the receiver's bank account. Besides saving time, this also means you are not beholden to the terms of service of a 3rd party (that often isn't subject to the same consumer protection regulations that banks are).Zelle is really just a rebranding of the ClearXChange system that banks have already offered for a while under brands like Chase Quickpay or Wells Fargo Surepay. These always worked across banks, but most people didn't know that. That's why they are introducing Zelle as a unified brand.
how is this different than square cash?
Why even use square cash?Honestly with something like this, I have a hard time seeing why anyone would use a 3rd party option. Why sign up for another service giving out your bank account/debit/credit card info? Why have someone download an app, signup, transfer money to it only to have you then take that money and transfer it to your bank account?
Just cut the middleman out. I'd say that's more than reason to use it. I mean heck, they state over 86 million Americans will be on the network. It'll already be built into your banking app.
There's too many options which cause fragmentation? Better introduce another option for people to use!
The difference is this option actually, and finally, makes sense. It's not going through some third party, it's going bank-to-bank direct.What is the alternative? My girlfriend and I have separate Capital One accounts. She helps me with bills by giving me cash monthly. We used to physically go to the ATM and withdraw from her account then deposit to mine (Which I know, is really dumb). So we use Square cash so we don't have to leave the house at all. How can I "cut the middleman"?
Right, sorry if I wasn't clear. I meant moving forward from here on out.Now that this is out, yes, this can kill off Square cash in my case