By any measure, Zelle has been a success in its nearly ten years of existence. Total volume on the platform reached $1.2 trillion last year—a 20% increase over the previous year—far surpassing Venmo and Cash App, which handled roughly $325 billion and $280 billion, respectively.
But that success doesn’t mean Zelle—or the member banks that offer it—can afford to get complacent. In Selling Zelle to Consumers: Priorities for the P2P Experience, Javelin Strategy & Research Digital Banking Analyst Lea Nonninger notes that Zelle lacks several features that other peer-to-peer (P2P) providers offer, that users often encounter friction, and that the overall user experience still falls short of what consumers expect from third-party apps.
Missing Features
Zelle is owned and operated by Early Warning Services, co-owned by seven of the largest U.S. banks. Today, it’s supported by more than 2,500 U.S. banks—roughly a quarter of all federally insured banks and credit unions nationwide.
After Zelle shut down its standalone payment app last year, it now relies entirely on direct integrations into financial institutions. The upside is that member banks can still link Zelle’s features into their own digital banking services.
However, because consumers interact with Zelle within their bank’s app or website, any frustration with the service reflects directly on the bank. This makes it crucial for banks to work closely with Early Warning to address user pain points and improve the overall experience.
“The absence of basic features such as recurring payments, favorite payees, group payments, transparent limits, and reminders makes routine tasks harder than they should be,” Nonninger said. “There are limits to what kind of capabilities they can offer, and that has to do with the consortium of those three parties together. It’s up to the banks to push Zelle into the right direction.”
“The three parties need to come together and ensure that they add on the features that users are missing,” she said. “Or that they fix the issues that customers are facing right now.”
Integration into Mobile Banking
Mobile banking existed long before Zelle’s 2017 debut. Since Zelle wasn’t part of the initial app development, its features have never felt fully integrated into the broader digital banking ecosystem.
“Zelle primarily sits siloed in a separate tab within digital banking, which is not always where it would be more valuable for customers,” said Nonninger.
While consolidating all Zelle functionality in one place is convenient, banks have an opportunity to embed Zelle across different parts of their apps, improving discoverability and usability.
“One of the areas of integration for Zelle I cover in this report is the transaction ledger, which is one of the most visited parts of mobile banking,” Nonninger said. “It’s the most frequent one that customers go to when they open their app. They want to see their latest transactions. Zelle is closely associated with recent transactions, making the transaction ledger a natural place to link out to Zelle.”
“If you went out to dinner with friends and reviewed that dinner payment afterward in your transaction ledger, why is there not a call back to Zelle to split that payment with your friends after?” she said. “Adding a link to Zelle makes it easier for customers to split payments, and avoids having to go to the siloed Zelle tab. They can do everything then and there.”
Boosting Engagement
Zelle is no longer just a nice-to-have feature, customers expect and rely on it. Banks that want to remain their customers’ primary financial hub can’t afford to be without a P2P solution.
But Zelle comes with costs for banks. While free for customers, banks pay a per-transaction fee to Early Warning. This underscores the importance of ensuring a return on that investment—by driving customer engagement and gaining valuable insights into spending patterns.
The most important question for banks is what role they want Zelle to play for their customers. Ideally, Zelle should be used for everyday shared finances, such as recurring bills and subscriptions, in addition to one-off payments to friends. Yet many banks still don’t support recurring Zelle payments.
“If banks want Zelle to be for everyday finances, including shared recurring finances, it’s all about taking care of finances for customers so they don’t have to think about it every month or every week,” said Nonninger. “Customers want to be able to manage those recurring payments as easily as possible. However, that is unfortunately often not possible with current Zelle capabilities at many banks.”
The Competition Is Always Available
These conversations are already underway between Zelle and its providers. The next step is for banks to actively guide Early Warning in the direction that best serves their customers.
“Zelle has a lot of good capabilities and it’s come a long way, but it’s important to remember that it’s not a finished product, and to consider which areas they could expand into,” Nonninger said. “Make sure that the customer’s pain points and needs are considered at all fronts.”
“It’s up to the banks to make sure that Zelle is always the first thought,” she said. “Since most people have and use multiple P2P payment providers for different reasons, it’s all about making sure that Zelle offers everything customers need. If they decide to go with an alternative like Venmo, it should never be because the capability isn’t available with Zelle.”
