What’s Zelle and how do you use it?

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Freelancers, small business owners, and lovers of convenience, rejoice! There’s a newer way to send and receive payments, and it’s slated to become even more accessible this fall.

Zelle, a payment service that is backed by more than 30 U.S. banks including huge players like Chase, Bank of America, and Wells Fargo, is launching an app on September 12th of this year. This is after operating via major bank websites and bank apps since its initial launch in 2017. The new Zelle app will be available on iOS and Android and will support debit cards, checking accounts, and savings accounts.

According to a 2017 study from PYMNTS.com, mobile wallet usage is more popular than ever. Up to 24% of adults with smartphones have used Walmart Pay at least once, while 13% have used Apple Pay, 7% have used Android Pay, and 5% have used Samsung Pay. It’s only natural that adults used to paying with smartphones will continue to look for ways to use technology to send and receive money at lightning speed.

Cost is naturally a factor, which is why Zelle is slated to provide real competition to other money transfer apps like Paypal and Venmo. Fortunately, Zelle exceeds expectations in this arena. It’s free to use, so what else could you want?

Getting started with Zelle

To use Zelle, including the new Zelle app, consumers need to sign up for a Zelle account then link their bank account. From there, Zelle users can send money using an email address or phone number similar to how they would use Paypal. The recipient must also sign up for Zelle to receive the funds. The new Zelle app also offers the following features:

  • Split payment capabilities
  • Instantaneous transfers
  • Transfers to your bank account

There is a slight delay between when you get started with Zelle and when you can actually receive money since you’ll need to authenticate your contact details. The app will also set limits on how much users can send and receive in a day, although those limits will depend on your bank and their rules.

With Zelle:

  • Money can be transferred between accounts instantly and for free
  • Money can be cashed out to a bank account instantly and for free

This is a departure between competitors Paypal and Venmo, which are owned by the same company. Paypal charges a fee (25 cents) for instant withdrawals, while Venmo doesn’t offer that option and can take up to 24 hours to move your money.

In summary, getting started with the new Zelle app will be easy, just as using Zelle via your banking app is easy now. You simply sign up for an account and start moving money once your account is authenticated through validation of your email or phone number. There are no fees for using the service, and your money transfers right away.

What to watch out for

While Zelle promises the world and delivers, it’s important to note that the service has been under fire for their security practices — or lack thereof. The New York Times shared some of the problems with Zelle security in a piece earlier this year, citing the fact that some banks implemented the app without basic precautions such as two-factor authentication. This made Zelle transactions with these banks overly susceptible to fraud, they say.

There have also been too many instances where crooks and thieves have targeted consumers using concert tickets or other bait to get money transferred instantly (and irreversibly) through Zelle. Not surprisingly, these crooks hawking concert tickets or other goods on craiglist.org and elsewhere go silent once their money is safely in their account, leaving the consumer buying their item on the hook.

The bottom line: While Zelle transactions are mostly safe, make sure you know who you’re paying to before you hit that send button. If you buy an item and pay for it with the app, you won’t get your money back if the seller fails to deliver. You will also be out of luck if you send cash to the wrong person, they accept, and don’t want to cooperate with a refund.

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Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."