How Does Zelle Make Money?

Zelle is a peer-to-peer payment network that indirectly benefits the banks’ consortium that backs it. Zelle also enables users to pay businesses for goods and services, free for users. Merchants pay a 1% fee to Visa or Mastercard, who share it with the bank that issued the card.

Origin story

Zelle is a peer-to-peer (P2P) payment network. It allows users to send money quickly and easily to their friends and family from a mobile device.

Zelle was created in collaboration between 30 U.S. banks. The standalone Zelle app is integrated with approximately 924 financial institutions, including major players such as Chase, Citi, Wells Fargo, and Bank of America to name a few.

The app moves money from one bank account to another in a matter of minutes. The only information required is the email address and phone number of the recipient. This makes it a more attractive option than a traditional bank transfer, which requires account number details and can take several days.

Read Also: How Does Venmo Make Money?

Zelle revenue generation

Zelle is not a fee-based platform, so it does not generate revenue directly. In fact, it was created to save banks money. Competitor P2P offerings such as PayPal, Venmo, and Square charge banks a fee for every transaction, so keeping these transactions in-house reduces costs. This also allows the banking institutions to capitalize on a general shift toward a cashless society and avoid having to maintain ATMs and branch offices.

Importantly, the app also generates indirect revenue for the consortium of banks that collectively have access to 100 million users in the United States. This encompasses a host of add-on and complimentary services such as credit cards, mortgages, loans, and insurance.

Generation X and Baby Boomer users have also become a significant growth area for Zelle, many of whom were previously unfamiliar with the P2P concept. After just two years, the app has become the largest P2P service in the U.S with users completing around 743 million transactions worth $187 billion.

Although not explicitly stated, Zelle owner Early Warning Services LLC likely receives a payment from participating banks to maintain the integrity of the Zelle network.

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B2C and other potential revenue generation models

In 2018, Zelle launched a feature enabling users to pay businesses for goods and services.

For the consumer, Zelle offers this service free of charge. But the merchant must pay a 1% fee to Visa or Mastercard who then share the resultant revenue with the bank that issued the card.

Looking forward, it would not be unreasonable to suggest that other financial products be recommended within the Zelle app. This would allow partnering institutions to generate revenue through affiliate commissions and referrals.

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Zelle vs. Venmo

Venmo is another P2P platform that makes the process of sending and receiving money easier for the consumer. While Zelle and Venmo have more or less the same functionality, there are a few key differences.

Zelle enables users to transfer funds between the accounts of participating banks for free. Funds that are used in these transfers do not reside in a holding account. Instead, they are withdrawn from (or deposited into) the bank account of a sender or receiver.

Venmo, on the other hand, more closely resembles a digital wallet. In other words, funds are held within Venmo itself with a balance that can be spent, send to others, or reloaded. Transfers are normally completed in 1-3 business days, but there is a 1.5% fee for those who desire instant transfers. Note also that Venmo offers a branded debit and credit card that can be used to purchase products and services from approved merchants.

With the above in mind, let’s take a look at some other comparisons between the two platforms.


As noted earlier, Zelle is free to use for funds that are transferred between a linked bank or credit union account. 

Venmo is more expensive to use and charges more fees – though this is mostly because it offers more features. For example, there is a 3% fee for credit card transactions up to a total value of $15. There is also a $2.50 fee for out-of-network ATM withdrawals. 


Both platforms have built-in security features that make them relatively safe to use. Both monitor transactions for instances of fraud, with Venmo using data encryption to protect sensitive information.

Venmo also offers consumers the ability to add a PIN for multifactor authentication.


At the time of writing, Zelle and Venmo are only available for residents of the United States. This means that both are unable to send or receive money internationally. 

However, it should be noted that are various workarounds for users who like to travel, such as the use of a VPN.

Speed and ease of use

Zelle offers free instant delivery of funds, though many users will find that the amount they can transfer is restricted by their particular bank. In many cases, transfers are capped at $500. In scenarios where transfer limits are not in place, Zelle users may experience delays as the platform works to ensure the transaction is not fraudulent. Others have also noted that in the case of money that is sent to the wrong account, Zelle cannot reverse the transaction.

Venmo, as we noted earlier, charges a fee for instant money transfers. Credit cards give users more flexibility to make payments if they are willing to pay a premium for the privilege. Since the funds in a Venmo account must be sent to a bank account to make purchases, one could argue that the company’s app is slightly less user-friendly than the Venmo app.

Key takeaways:

  • Zelle is a P2P network allowing users to seamlessly transfer money to their friends and family. It was created by a consortium of 30 North American banking institutions.
  • Zelle is a free platform that does not generate revenue directly. However, the app was likely developed to maintain market share in the P2P industry and reduce third-party fees from competitors. There is also scope to suggest that Zelle causes increased consumer uptake of add-on financial services.
  • In the B2C space, Zelle shares a 1% merchant fee with Visa and Mastercard. As the service becomes more mainstream, affiliated financial products may be recommended in the app itself.

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