How Zelle plans to rebuild consumer trust

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The Zelle network’s bank affiliations gave it immediate trust and adoption among the nation’s banked population, but now the P2P network needs a plan to confront the fraudsters who have already found ways to exploit that trust.

Zelle handled 85 million transactions totaling more than $25 billion in just the first quarter of 2018 — not bad for a network that officially launched in mid-2017. Zelle likely wouldn’t have seen such growth without the endorsements of the major banks, and that brand strength quickly became Zelle’s weakness.

By embedding itself into the apps of the mega-banks that operate Early Warning, the company behind Zelle, the P2P network essentially leapfrogged the early stage most startups face in building trust and audience.
“Scams unfortunately have been out there with every payment form factor that I’ve ever known,” said Donna Turner, chief fraud policy and control officer for Early Warning, during a panel discussion at SourceMedia’s Card Forum, taking place this week in Miami. Turner is one of PaymentsSource’s Most Influential Women in Payments for 2018.

In Zelle’s case, scammers tricked people into sending funds under false pretenses. Though the scam was little different than a digital spin on asking people to write a check or hand over an envelope of cash, its use of Zelle as the transfer mechanism gave the fraudsters an unearned air of legitimacy. This led to scathing stories in mainstream publications like The New York Times and TechCrunch, which spotlighted the risk of sending money over Zelle to unknown recipients.

The answer to this problem is educating consumers, according to Turner. But how can Zelle accomplish this when it shares the responsibility with more than 100 banks that own its customer relationships?

One of Zelle’s main selling points is its consistent design philosophy; regardless of which bank a consumer uses, the Zelle interface should look more or less the same. This is the part of the customer experience Zelle controls, so it’s the consortium’s best means of delivering its security message.

“There is a need to really step up in our focus on consumer education around these scams,” Turner said. “What are things in the UX [that we can change]? What are things in the middle of the transaction, that we can take our knowledge about that transaction and insert additional immediate, real-time educational opportunities?”

That said, there are other risks associated with P2P and the banks must take different approaches to all of them, she said.

One is unauthorized payments, Turner said. For that, banks need to “go back to the basics,” she said. “What do I know about that login, what do I know about that device, what do I know about that transaction?”

The final major risk is miskeying recipient info, Turner said. While it is certainly easier to type an email address and phone number than it is to key in a full account number, mistakes will happen, and banks have to be prepared to support the consumer and offer to reverse transactions in good faith.

Ultimately, the most important thing is to listen to the data, she said.

The New York Times article led with a very compelling stat from PricewaterhouseCoopers about P2P fraud, but PwC later retracted that estimate.

Zelle’s responsibility is “separating fact from sound bite,” Turner said. “Everybody loves a good sound bite, everybody really loves a good fraud story — so keeping [partners] grounded in the data is important.”

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P-to-P payments Security risk Zelle PriceWaterhouseCoopers Early Warning