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Largest US banks launching Zelle: P2P payments with transfers within *minutes*

G

giga

Member
https://www.bloomberg.com/news/arti...debut-faster-peer-to-peer-payments-with-zelle

https://www.zellepay.com: Transactions made between financial institutions in the Zelle NetworkSM typically complete within minutes. If your recipient does not have access to Zelle through their bank or credit union, transactions could take between 1 and 3 days to complete.

A coalition of financial firms across the U.S. is finally ready to instantly beam your cash to friends, family and businesses.

More than 30 U.S. banks and credit unions are unveiling a unified service to customers this week, called Zelle, after years of watching Silicon Valley innovators from Square Inc. to Apple Inc. build peer-to-peer payment systems. It will supplant a patchwork of products the biggest banks have offered their customers for years. This time, the service is faster and so broad, that chances are it already has your money.

Across the nation, about 86 million mobile-banking customers will soon see Zelle logos in the apps managing their accounts, according to a statement Monday from Early Warning Services, a bank-owned risk-management firm that oversees the network. The Zelle symbol looks like a cross between a Z and a dollar sign. On many devices, a button may urge users to ”Send money with Zelle."
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b0bSY7l.png
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List of banks: https://www.zellepay.com/participating-banks-and-credit-unions
 
G

GoldenEye 007

Member
"No eye rolls necessary when you just have a coffee and your friend orders the avocado toast."

I'm a fan already! But anyway, I'd like to know the fees, if any. A solid contender against Venmo it looks like.
 
T

The Albatross

Member
Well they really picked a clear, not-confusing name...

Don't care. Transfers using Venmo, PayPal, Google Wallet, Apple Pay, and the billion other services do the job for me. If I needed the money in my account immediately then I guess I could kinda understand it... but... I've never needed that.

Here's the list of banks:
https://www.zellepay.com/partners

Some major ones on there...
Ally, BoA, Capitol One, Chase, Citi, Citizens, TD Bank, etc.

I have a small credit union, so I could only see them getting on board if a group of credit unions join up as part of a partnership, and then they're all in... Sort of like whatever that ATM network is, forgetting the name of it.

Notably missing, Santander / Sovereign / whatever they're known as where you are.
 
V

Ventilaator

Banned
Wait, just sending money to someone takes days in the US?

If I send money to someone and the money isn't received immediately, I get scared that I must have entered something wrong somewhere or something is terribly broken.
 
G

giga

Member
The Albatross said:
Well they really picked a clear, not-confusing name...

Don't care. Transfers using Venmo, PayPal, Google Wallet, Apple Pay, and the billion other services do the job for me. If I needed the money in my account immediately then I guess I could kinda understand it... but... I've never needed that.
Click to expand...

I see a use case for both. If I needed immediate transfers, sure I'll use Zelle in my mobile banking app. But more likely than not I'd probably rather pay/receive with what's more convenient for me, which will probably be Apple Pay in iMessages later this year.

Ventilaator said:
Wait, just sending money to someone takes days in the US?

If I send money to someone and the money isn't received immediately, I get scared that I must have entered something wrong somewhere or something is terribly broken.
Click to expand...
Yep. The industry charges for their instant wire transfers so US consumers have only had things like Venmo and Square Cash in the past few years to give us 1 or 2 day transfers.
 
M

MikeHattsu

Member
GoldenEye 007 said:
"No eye rolls necessary when you just have a coffee and your friend orders the avocado toast."

I'm a fan already! But anyway, I'd like to know the fees, if any. A solid contender against Venmo it looks like.
Click to expand...

https://techcrunch.com/2016/10/24/z...-compete-with-venmo-now-has-19-us-fi-backers/

One thing that is not entirely clear is whether the network will charge for sending payments. On the question of fees the company had this to say: “There are no fees directly from Zelle. Pricing is set by network partners and as of right now, no partners are planning to charge fees.”
Click to expand...
 
T

The Albatross

Member
giga said:
I see a use case for both. If I needed immediate transfers, sure I'll use Zelle in my mobile banking app. But more likely than not I'd probably rather pay/receive with what's more convenient for me, which will probably be Apple Pay in iMessages later this year.
Click to expand...

Yeah, I think the unknown of whether my sender/recipient has a bank in this service is what prevents me from adopting it. Where as almost everybody I know has Venmo or PayPal... Asking someone "Does your bank accept Zelle?" to me is a more difficutl question than just, "You have venmo right?"

Ventilaator said:
Wait, just sending money to someone takes days in the US?

If I send money to someone and the money isn't received immediately, I get scared that I must have entered something wrong somewhere or something is terribly broken.
Click to expand...

Depends on the bank. I have a credit union (like a small independent bank) and they're part of a network of other credit unions where if you send money to someone, it's instantaneous, so if my wife transfers money to me or vice-versa, it's available right away. But, if I transferred money to someone in a different bank, like a big national banks like Bank of America or something, then it's like writing them a check. Usually the money just appears in your account but it's really on a hold for 2 days while it clears... THat's usually hidden from the consumer though at most banks, so your account balance goes up and it says "Transfer from XYZ bank #12345541" but the money is actually on hold for it to clear similar to a personal check.

Most young people I know use apps like Venmo or PayPal for transferring money to friends/people because the UI is always better than your bank (well, Venmo's UI is like Circa 2014...) and seems like everybody age 20-35 has it. Sending money to someone using Venmo, PayPal, Google Wallet, iPay, etc., is isntantaneous, but to transfer your acct balance to those services to your bank usually takes like 1-3 days.
 
G

GoldenEye 007

Member
Ventilaator said:
Wait, just sending money to someone takes days in the US?
Click to expand...

Yes, generally. The main way around it is if each party has the same bank. Outside of that, 3rd party payment systems that take days.

The US really isn't modern when it comes to payment systems. I've also loved how when you buy something, that shit is out of your account instantly. Want to return something? Could take days to over a week to get back.
 
Ron Mexico

Ron Mexico

Member
Ventilaator said:
Wait, just sending money to someone takes days in the US?

If I send money to someone and the money isn't received immediately, I get scared that I must have entered something wrong somewhere or something is terribly broken.
Click to expand...

Prior to this there were 2 major ways to send money electronically:

Wire transfer-- handled through the Fed, fast, but usually substantial fees on both sender and receiver. Little to no recourse if a wire is sent to the wrong beneficiary, sender changes mind, etc.

ACH-- handled by NACHA, slower process in exchange for cheaper and more recourse. Paypal, your direct deposits, online bill pay, etc etc all use ACH. Some will advertise these services as being "instant", but it's more the receiver undertaking the risk of making the funds available before the ACH comes in. Can dispute unauthorized or otherwise misplaced/misused transactions.

Now, Zelle looks like they're trying to thread the needle between wire speed and ACH recourse. The cynic in me says expect overdraft/transactional fees to rise as everyone rushes to price in their risk. Free checking (without any strings attached like direct deposit or transaction limits) is already on shaky ground-- that could easily go away too.

Banks want you to spend less time in their branches (unless you're there to buy of course). This is just another step. Can't wait for the knock-ons.
 
Ron Mexico

Ron Mexico

Member
The Albatross said:
I have a small credit union, so I could only see them getting on board if a group of credit unions join up as part of a partnership, and then they're all in... Sort of like whatever that ATM network is, forgetting the name of it.

Notably missing, Santander / Sovereign / whatever they're known as where you are.
Click to expand...

This is exactly what's going to happen. The Jack Henry & Associates mention in the article all but assures it. You're going to see this rolled out in the same way you see shared branching.

And Santander is a curious omission.
 
D

Donos

Member
GoldenEye 007 said:
Yes, generally. The main way around it is if each party has the same bank. Outside of that, 3rd party payment systems that take days.

The US really isn't modern when it comes to payment systems. I've also loved how when you buy something, that shit is out of your account instantly. Want to return something? Could take days to over a week to get back.
Click to expand...

Same in germany. If it's between the same Bank (like Sparkasse) it's rather fast, at the same day. But other banks takes 1-3 days.
 
Y

YesThatGuy

Banned
The biggest culture shock I experienced after moving to the US is how limited and backwards banking is compared to my country, specially online services (and there are a few banks with online fronts straight from the 90s, like Santander).

And then, I had to do taxes.
 
Ron Mexico

Ron Mexico

Member
GoldenEye 007 said:
The US really isn't modern when it comes to payment systems. I've also loved how when you buy something, that shit is out of your account instantly. Want to return something? Could take days to over a week to get back.
Click to expand...

So the process definitely sucks and there's room for improvement all around, but I feel like I should at least explain the why for this.

I'm assuming you're using your debit card since you know it's out instantly-- what's actually happening is the merchant is obtaining an authorization to eventually take those funds. Your card issuer is saying "oh shit-- they're going to want this money. Better tuck it aside in the interim". The actual money going from your account to the merchant's takes the same amount of time in both directions.

With a refund, there's no need to pre-authorize a return (which is also why you can do a refund to a closed/cancelled card). You're just at the mercy of the antiquated system doing its thing.

The authorization vs. actual funds transfer is also why I'd never use my debit card for hotels and car rentals and some (usually higher end) restaurants. They're going to hold additional for incidentals and whatever isn't used isn't made available again until the initial authorization expires.
 
T

ThreePiMatt

Member
I used Chase QuickPay for a while until they closed it off to non-Chase customers. Had to switch over to PayPal, which is whatever. Obviously if enough banks adopt it, and the fees are zero or near-zero, I'd probably be cool with using this.
 
B

Broken Hope

Member
Miles Quaritch said:
This has been standard in the UK for what feels like years.

How is the US so behind in banking. Barely adopted chip and pin while everyone else moves into contactless.
Click to expand...

They didn’t even adopt pins because apparently Americans are too stupid to remember 4 numbers, wish I was kidding too.

But yeah we’ve had the equivalent of this system since 2014 (PayM)

And we’ve been able to do instant bank transfers since 2008 apparently. (Faster Payments)
 
G

GoldenEye 007

Member
Aeana said:
He may have meant Chase QuickPay.
Click to expand...

I think QuickPay is maybe only for Chase customers? But it does appear QuickPay integrates Zelle. So that may indicate some benefit to non-Chase users.

It seems like Zelle for now, just rests into your existing payment apps rather than being a standalone app. Although it looks like that will be an option later on.
 
Ron Mexico

Ron Mexico

Member
GoldenEye 007 said:
I think QuickPay is maybe only for Chase customers? But it does appear QuickPay integrates Zelle. So that may indicate some benefit to non-Chase users.

It seems like Zelle for now, just rests into your existing payment apps rather than being a standalone app. Although it looks like that will be an option later on.
Click to expand...

It's already an uphill battle for the banks to get its customers into using their mobile app and online banking regularly (remember we're on a forum where it can easily be assumed we're all tech savvy). The only way this will gain any traction is if they integrate it into the existing solutions and only upon its widespread adoption do they think about branching into a standalone app.
 
G

GoldenEye 007

Member
Ron Mexico said:
So the process definitely sucks and there's room for improvement all around, but I feel like I should at least explain the why for this.

I'm assuming you're using your debit card since you know it's out instantly-- what's actually happening is the merchant is obtaining an authorization to eventually take those funds. Your card issuer is saying "oh shit-- they're going to want this money. Better tuck it aside in the interim". The actual money going from your account to the merchant's takes the same amount of time in both directions.

With a refund, there's no need to pre-authorize a return (which is also why you can do a refund to a closed/cancelled card). You're just at the mercy of the antiquated system doing its thing.

The authorization vs. actual funds transfer is also why I'd never use my debit card for hotels and car rentals and some (usually higher end) restaurants. They're going to hold additional for incidentals and whatever isn't used isn't made available again until the initial authorization expires.
Click to expand...
Yeah, I generally only use credit too. Especially for hotels/rentals. Even then, you see an immediate hold on whatever funds.

But right after I made my comment, I searched for an explanation and I got similar info. Makes sense given the current trash systems we have.
 
L

LumpOfCole

Member
Is it pronounced Zell or Zellay? My dog mostly only understands Arabic so telling her to "Zellay" is basically telling her to get down from whatever she climbed on.
 
Ron Mexico

Ron Mexico

Member
Herr Schwarz said:
Bank transfer fees are a fucking racket.

Paying for what? A few KB of data?
Click to expand...

They're paying for the "implied" risk of making the money available before they're actually made whole from the sender.

That said, some more fun for the cynics-- the bigger banks especially, make a TON from fee income. Numbers approaching 40%+ of their total income isn't uncommon. All a reaction to post-2008 when rates were so low and the spreads between deposit and lending rates were terrible. Now rates are going back up, spreads are increasing but so are fees-- they want to have their cake and eat it too.

Bottom line? Zelle may be "free" but it won't be free.
 
L

Laevateinn

Member
Jonnax said:
Minutes you say?
Why is US consumer banking so crap?
Click to expand...

Ventilaator said:
Wait, just sending money to someone takes days in the US?

If I send money to someone and the money isn't received immediately, I get scared that I must have entered something wrong somewhere or something is terribly broken.
Click to expand...

Ron Mexico said:
Prior to this there were 2 major ways to send money electronically:

Wire transfer-- handled through the Fed, fast, but usually substantial fees on both sender and receiver. Little to no recourse if a wire is sent to the wrong beneficiary, sender changes mind, etc.

ACH-- handled by NACHA, slower process in exchange for cheaper and more recourse. Paypal, your direct deposits, online bill pay, etc etc all use ACH. Some will advertise these services as being "instant", but it's more the receiver undertaking the risk of making the funds available before the ACH comes in. Can dispute unauthorized or otherwise misplaced/misused transactions.

Now, Zelle looks like they're trying to thread the needle between wire speed and ACH recourse. The cynic in me says expect overdraft/transactional fees to rise as everyone rushes to price in their risk. Free checking (without any strings attached like direct deposit or transaction limits) is already on shaky ground-- that could easily go away too.

Banks want you to spend less time in their branches (unless you're there to buy of course). This is just another step. Can't wait for the knock-ons.
Click to expand...

I work as an engineer for one of the largest banks in the country but not in this area. Ron Mexico covered a large portion of why bank to bank transfers take a long time.

Other bank operations take a long time because we are still living in a mainframe batch processing world designed decades ago. The databases banks are using are incredibly large and not well architected. The mainframes that to all of the transaction processing are expensive but aging work horses. All of their code is written in COBOL, a language few people specialize in nowadays. This means that every operation that changes the database is expensive and time consuming and done once a day in large jobs that are executed in a queue.

In the case of my bank, we are in the process of redefining and standardizing most of our transaction logic and designing a computation architecture that tries to process data as we get it but this is a huge task that will take years.
 
G

gillty

Banned
Why are American banking services so antiquated? I understand the massive and dated existing architectures are in place, but what makes this any different from Canadian banks except scale? It seems the big banks in the US allowed their lunches to get eaten.

Over 10 years ago I was using email money transfers through online banking.
interac-email-transfedjszh.png
 
C

Culex

Banned
gillty said:
Why are American banking services so antiquated? I understand the massive and dated existing architectures are in place, but what makes this any different from Canadian banks except scale? It seems the big banks in the US allowed their lunches to get eaten.

Over 10 years ago I was using email money transfers through online banking.
interac-email-transfedjszh.png
Click to expand...

I think some people here are misunderstanding the US wire system. If it's domestic, you will generally get your money within 30-60 minutes. There is a mandatory 30 minute "cool-down" period where you can rescind the wire before it leaves your bank and goes to the nearest FEDWIRE account. Even then you can do a dispute. I've done about a dozen dispute for domestic wires over the past few years- 100% success rate in clawing the funds back.
 
D

Damaniel

Banned
I'm actually surprised that my credit union (First Tech) is on the list.

I couldn't tell, but are they charging for this service?
 
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