Zelle

Detailed Explanation

Zelle is a payment service that enables rapid transfers of money between bank accounts without the need for cash, checks, or wire transfers. It is integrated into the websites and apps of participating banks and credit unions, allowing users to send and receive money using only the recipient’s email address or mobile phone number. The service is known for its speed, with transactions typically completing within minutes. This makes Zelle a popular choice for splitting bills, paying rent, or sending money to friends and family.

Zelle is built on the existing financial infrastructure of its member banks to provide a secure way to conduct transactions. The network connects with financial institutions, ensuring that the service is backed by the security measures of users’ own banks, thereby alleviating concerns regarding the safety of funds during transfers. Zelle is free for users; however, it’s essential to confirm with individual banks as they may have their own terms regarding Zelle transactions.

Example

Sarah shares an apartment with her roommate, Erin, and is responsible to pay 50% of the rent. Each month, before the rent is due, Sarah sends her share of the rent, $750, to Erin via Zelle. Sarah's mobile banking app supports Zelle transfers. While Erin's bank does not, she was able to enrol using her Visa debit card and receives the money from Sarah within minutes. 

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Related Terms

Electronic Funds Transfer (EFT): The electronic exchange or transfer of money from one account to another, either within the same financial institution or across different institutions.

Mobile Payment: Payment services operated under financial regulation and performed from or via a mobile device.

Payment Gateway: A merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing.

Real-Time Payments: Immediate or near-immediate transactions that transfer funds and post them within seconds.

FAQs

Is Zelle safe to use for transferring money?

Yes, Zelle is safe as it uses bank-grade security measures to protect transactions. However, users should be cautious about sending money only to people they know and trust.

Can Zelle be used to send money internationally?

No, currently, Zelle is available only for transfers between bank accounts in the U.S.

What happens if I send money to the wrong person via Zelle?

Funds sent through Zelle cannot typically be canceled once they are sent if the recipient is already enrolled. It is crucial to double-check the recipient’s information before confirming a transaction.