Some of the biggest banks in the U.S. are teaming up on a real-time payments network to rival the likes of PayPal, Venmo and Square Cash. The new venture is dubbed Zelle and will be available both as a standalone app and as a new feature within banks’ own official apps and websites, offering virtually instant deposits across banks at no extra cost.
Nineteen U.S. financial firms, including Wells Fargo, J.P. Morgan Chase, Bank of America as well as regional lenders and credit unions have signed up for Zelle. It will be accessible to more than 76 million mobile banking customers from the start, allowing them to send money to one another using an email address or mobile phone number.
The move comes as traditional financial firms are eager catch up with Silicon Valley upstarts that have proven popular with consumers and to dispel their industry’s image as slow.
To ensure funds are delivered instantly, banks are agreeing to back each other’s transfers, even if the actual funds haven’t formally settled on the back end.
In contrast, Venmo transfers typically take a day or two to become available for withdrawal, although the company is partnering with Visa and MasterCard for instant transfers when using a debit card. Meanwhile, Square Cash offers instant deposits for a fee.