Major Banks Consider Zelle For Merchant Payments In Nod To Competing With Visa, MasterCard

Major Banks Consider Zelle For Merchant Payments In Nod To Competing With Visa, MasterCard

Big banks look like they could be devising a plan to try and take on credit card giants Visa and Mastercard. And that plan is shaping up to look like it will depend on money transfer service Zelle, which saw its growth explode during the pandemic.

Banks are considering bringing Zelle to the checkout counter at big retailers, a new report from the Wall Street Journal noted Wednesday morning. 

The payment service posted 1.8 billion transactions in 2021 amounting to $490 billion in cash changing hands. In 2021, it posted “more than double” of its prepandemic levels of both number of transactions and dollar amount of transactions, the report said. 

Banks like JP Morgan, Bank of America and Wells Fargo are weighing whether or not that explosion of activity can be used to create a payment option that competes with Visa and Mastercard.

Moving away from Visa and Mastercard would give banks more say over fees for transactions, and potentially increase fees that wind up directed to the banks. 

“Bank of America customers made more Zelle transactions than wrote paper checks for the first time ever last year,” the Journal noted in its writeup. There’s currently about 1,450 financial institutions that offer Zelle for their customers. 

Banks have already begun reaching out to select merchants to see whether or not they would be interested in such a change. A spokesman for the company that owns Zelle said the company is “working with financial institutions to explore more opportunities”. 

Zelle saw a 162% increase in small business payments in 2021, the report says. 

Three banks are also planning on launching a pilot that will allow Zelle to send rent payments to large property managers. 

Tyler Durden
Wed, 04/06/2022 – 20:00

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