how does zelle make money

How Does Zelle Make Money

“I wish I wouldn’t have to stand in line at the local bank branch, but still get my money in minutes.” — this was literally a pipe dream three decades ago. But now with tech growing at 10x the speed of a bullet train, there are a lot of easy money-transferring apps helping us save our time, energy, and effort!

What is Zelle And How Does It Work?

Zelle is an online-only service that lets you move money from your bank account to another bank account. Additionally, it has no fees associated with money transfers — making it an ideal pick!

The technology used in this US-based mobile app is a trustless P2P payment system that transfers the money straight from one person’s bank account to another in real-time, making it rather different from apps like Venmo.

All you need is the recipient’s email or mobile phone number to complete the transaction. When a payment is ready, Zelle sends a payment notification to the recipient through text message or email and provides a link to receive the money.

Now coming to how it exactly works — Well, you can download Zelle and send money with it as long as you have a Visa or Mastercard debit card. If your bank already integrates with Zelle, you’ll be able to use the avail Zelle service directly from your bank’s mobile banking app / online banking app.

If your financial institution doesn’t support Zelle payment, no sweat; you can easily get started by downloading the Zelle app and following the on-screen instructions.

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How Does Zelle Make Money?

Zelle makes money through a variety of indirect channels such as bank fees, ongoing maintenance charges, and merchant fees.

Now let’s look more closely at “How Does Zelle Make Money.”

Zelle runs on a freemium business model when it comes to one-to-one user transfer, that is, it is completely free for both users.

This is where the Zelle business model varies drastically from its rivals, such as Square, Venmo, and PayPal, which charge banks a fee for each transaction. Precisely for this reason that every other app was charging an extra fee, the company “Zelle” was born.

Banks introduced Zelle in an effort to reduce the additional cost associated with each transaction. Banks wanted to provide a service that would exempt consumers from paying heavy transaction costs.

By employing this strategy, banks would be able to stop many users from using other services and convince them to use Zelle instead for daily transactions, allowing them to benefit from those transactions.

So Zelle instead of directly taking a fee from its customers charges the participating banks a fee. The banks in this case pay between $0.50 and $0.75 for each transaction. So, when more transactions occur, the fee that banks pay also increases (this accounts for the major revenue source of Zelle). 

Additionally, since approximately a thousand banks and credit unions participate in Zelle network and some of the largest banks own the company, each financial institution is required to pay fees to defray Zelle’s operational and technological development costs.

Lastly, Merchant Fees are another revenue stream for Zelle.

In 2018, this function was introduced on the Zelle app, enabling users to pay vendors for buying products like groceries, vegetables, etc. Further, the merchant has to pay a 1% fee to its bank that’s managing the payment network.

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A Short History Of Zelle

Zelle, a trustless P2P payment system, is a US-based company owned by Early Warning Services, LLC, a financial firm that is owned by some of the biggest names in the financial sector, including Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo.

It was first introduced in 2011 under the name clearXchange and was initially owned by Bank of America, JPMorgan Chase, and Wells Fargo.

In January 2016, clearXchange was sold to Early Warning Services after Capital One and US Bank joined as partners.

All clearXchange accounts used for P2P payments were then converted to Zelle accounts in December 2017 — marking the beginning of the Zelle payment service!

Since then, the Zelle app has been vying to overtake Venmo, PayPal, and other financial giants in the market.

Headquartered in Scottsdale, Arizona, United States, Zelle currently has more than 1000 financial institutions as a part of the Zelle Network, including MasterCard and Visa, FIS, Fiserv, Jack Henry & Associates, and National banks like Morgan Stanley.

Revenue, Funding And Valuation

Over the last 5 years Zelle has gained massive popularity among the millennial population. With over 4.8 star ratings on the app store, Zelle is surely climbing up the ladder to become the most popular mobile app for payments among the younger generation.

Source: Similar Web

According to the reports released in Aug 2021, Zelle processed an astounding 436 million transactions worth $120 billion.

Source: Insider Intelligence

Given that the participating banks in the Zelle network have to pay a fee of $0.50 to $0.75 for each transaction, by our calculations, the revenue must be north of $300 million. Further, there’s also a maintenance fee and merchant fee, which undoubtedly increases Zelle’s earnings even further.

However, since it is a privately held company and they don’t disclose its financial information publicly, we can’t be certain of this.

Considering that the company’s user base is now expanding by 15% on average per quarter, they can undoubtedly increase their numbers by focusing on the small business sector in order to increase their market share and expand their operations.

Regarding funding, it is clear that since Zelle was founded by some of the top institutions in the sector, these banks must have made large investments in its development. The precise funding amount and ownership stake of each owning bank, however, is unknown.

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Competitors Of Zelle

There are several P2P competitors of Zelle that also provide simple money transfers, making it a fiercely competitive market.

The top 5 rivals of Zelle are listed below:


Venmo, a PayPal subsidiary, allows users to transfer and receive money fast. It is essentially a peer-to-peer payment mobile app that allows you to send money, share expenditures, and receive money. 

With an annual growth rate of 29%, Venmo has over 516 million daily transactions happening with the help of the app, making it one of the most popular among the 25 to 34 age demographic.

With a revenue of over $850 million, Venmo currently has over 83 million users!

Source: Business Of Apps


PayPal spent $800 million in 2012 to acquire Braintree and Venmo in order to strengthen its position as a financial services provider. Since then, PayPal transactions have skyrocketed, reaching 19.3 billion in 2021.

Headquartered in San Jose, PayPal has over 426 million users at this time. PayPal, with a total profit of about $4.1 billion in 2021, has repeatedly shown itself to be the most reliable partner for online payments over the past two decades.


Square is a company that handles payments and provides merchant services that can be handled through mobile devices. Jack Dorsey, co-founder and CEO of Twitter, and Jim McKelvey established the company in 2009 with the intention of streamlining the process of financial transactions online.

Since its discovery in 2013, the application has been downloaded more than 33 million times and has generated a total of $9.19 Billion in net revenue in 2019.

Cash App

As another tough competitor, the Cash app aims to streamline the whole transaction process, including buying and selling shares and cryptocurrency.

Cash App, which first appeared on the market in 2013, officially cracked over the barrier of profitability and became a member of the Billion Dollar Profit Club in 2020 (with a whopping $1.23 Billion as profit).

The revenue of Cash App reached $12.3 billion in 2021, after having surged over the last two years, reflecting the company’s skyrocketing earnings.

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Google Pay

The digital wallet and payment platform known as Google Pay (popularly called, GPay) is a product developed by Google. It gives customers the ability to pay for purchases using their Android smartphones.

Using the app is pretty simple — you just have to save your credit card/debit card to your Google Account. Once you do it, you can send money to anyone by scanning a QR code or with their name, phone number, or email address.

It directly transfers the money from your credit card/debit card to the receiver’s account.

The reported revenues for the 2019-2020 fiscal year came in at $15 Billion, representing a 34.26% year-on-year increase. 

Google Pay has made around 960 million transactions in November 2020, proving it to be one of the most loved apps for easy transfer of money!


Who Pays The Fee On Zelle?

As was stated at the beginning of the blog post, it is absolutely free for a user to send money, raise payment requests, and receive money on Zelle. This indicates that there are no fees associated with using the platform. This is where Zelle and Venmo fundamentally differ as Venmo charges a fee for instant money transfers.
However, the participating banks do have to pay per transaction fee. 

Do Banks Pay For Zelle?

Zelle works on a freemium business model, which means it is free for both the person sending the money and the person receiving it. But this is not the case with the participating banks. Each transaction costs the banks between $0.50 and $0.75. 

What Percentage Does Zelle Take?

Zelle does not charge a percentage; instead, it charges the bank between $0.50 and $0.75 for each transaction. This implies that if a transaction is completed through a bank, the bank is responsible for paying a transaction fee to Zelle.

Now it’s quite clear why Zelle is one of the fastest-growing platforms ever given all the revenue streams and  business strategies it has implemented. With some of the brightest minds at work, Zelle’s numbers will surely be going to get crazier over time.

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