Several major banks are debating whether to position the digital payment platform Zelle as a retail point-of-sale alternative to Mastercard (NYSE:MA) and Visa (NYSE:V).
What Happened: Zelle is owned by Early Warning Services LLC, which is owned by a consortium of seven banks — Bank of America (NYSE:BAC), Capital One (NYSE:COF), JPMorgan Chase (NYSE:JPM), PNC Bank (NYSE:PNC), Truist (NYSE:TFC), U.S. Bank (NYSE:USB) and Wells Fargo (NYSE:WFC). In 2021, Zelle recorded approximately 1.8 billion transactions totaling $490 billion, levels that were double its pre-pandemic activity.
According to a Wall Street Journal report citing unnamed “people familiar with the matter,” executives at Bank of America and Wells Fargo were eager to put forth Zelle as a merchant payment alternative to Mastercard and Visa, thus enabling merchant fees to go directly to the banks without having fees taken out by the card networks.
However, JPMorgan executives were reportedly not eager to pursue that strategy, believing fraud protection for consumers using Zelle was a more pressing matter — that problem was the subject of a New York Times investigative report that claimed Zelle was a “popular target of scammers.”
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What Happens Next: Any update to the Zelle network would need a vote from the platform’s owners before it can go forward. The other banks that own Zelle are undecided on the issue.
Zelle is currently accepted by 1,450 financial institutions, and the Journal reported some of the banks are already in discussions with retailers to determine if there would be an interest in this endeavor.
