The Zelle P-to-P network is more than just a rebranding of clearXchange
, which was originally founded in 2011 to enable transfers among customers of the top U.S. banks.
The new version, launched officially in June 2017
, has 35 contracted financial institutions and requires fast settlement; the previous version launched with just three banks (though not all went live right away) and stuck to standard ACH timeframes of one to three days for settlement.
This has opened up new use cases beyond simple tasks such as millennials splitting rent payments. The new use cases are "generational," such as splitting costs for a family reunion, according to Lou Anne Alexander, group president of payments for Early Warning, which operates Zelle.
Those use cases could exist in other P-to-P apps, but non-millennials didn't consider those apps accessible. "They may have heard about P-to-P but ... didn't really know how to use it," Alexander said at SourceMedia's annual PayThink event.
In its plea for ubiquity, Zelle also has a standalone app that lets customers of any U.S. financial institution make transfers — within reason. At least one party to the transfer must use a Zelle bank, Alexander said.
"If you run out and download the Zelle app, we do not allow, for instance, a customer who is in an out of network financial institution to pay another out of network financial institution consumer, and that's because of our liability structure," she said. "I have to have somebody in that transaction take the liability."
In exchange for taking on the liability, banks get control of aspects such as transfer limits. "The app is meant for ... trying to garner that ubiquity, but it is our intent that every financial institution play," Alexander said.
P-to-P can also be a huge cost savings, according to Mary Harman, managing director for payments at Bank of America.
"We find the most costly transaction for us is when someone goes up an takes money from the teller. And there are a lot of people that still do that ... but that is orders of magnitude more expensive for us than the ATM, than the check, than any of the card-based transctions, and then we get to Zelle at the end," Harman said. "And so it isn't actually a revenue play, it's an expense-saving play."