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What is Zelle, and is it safe to use?

Learn more about how this peer-to-peer payment tool works.

Yahoo Personal Finance· Getty Images
Updated 6 min read

Zelle is a peer-to-peer money transfer service that allows you to transfer money directly to another person's bank account, often within minutes.

If you're looking for a free way to send instant transfers to your loved ones, here's what you need to know about how Zelle works and the safety features it uses to protect your information.

Zelle is a money transfer app that lets you quickly send or request money from friends and family members. However, Zelle works a bit differently than similar apps, such as Venmo, Cash App, and PayPal.

In particular, Zelle works directly with banks and credit unions, allowing you to access the service through your financial institution's mobile app. If either party's bank doesn't partner with Zelle, you can download the Zelle app to use the service by linking an eligible Visa or Mastercard debit card.

When you send money to someone who's already enrolled with Zelle, the money will go directly to their bank account, usually within minutes. If they aren't enrolled, Zelle will send them a notification via email or text message — depending on which information you used to identify them — explaining how they can enroll and receive the money.

Note that Zelle also works with small businesses, but only if the customer's bank partners with Zelle. The option isn't available if you're using the Zelle app.

If you're looking for a new way to send and request money instantly, here are the steps you'll take to get started.

Zelle currently partners with more than 2,000 financial institutions nationwide, ranging from national banks to community banks and credit unions. To find out if your financial institution works with Zelle, you can check your bank's mobile app or Zelle's database of banking partners.

If your financial institution partners with Zelle, you can typically enroll in the service in your banking mobile app using your email address or phone number.

If your banking app doesn't have the Zelle feature, you can download the Zelle app and enroll with your phone number and an eligible Visa or Mastercard debit card.

Whether you're sending or requesting money, you can select people from your list or add a new person using their phone number or email address. You can even give Zelle access to your phone's contact list and look up friends or family members that way.

Next, you'll enter the amount you want to send to or request from the other person. Tap on "Review," and you can confirm the amount and include a message.

Once you complete the transaction, the other person will receive a notification. If they're already enrolled with Zelle, the money you send will be transferred to their linked bank account within minutes. If you request money, they'll receive a notification to approve the transaction, after which you'll receive the money within minutes.

If the other person isn't enrolled in Zelle, they'll receive details on how to enroll so they can receive or send the funds.

Read more: 5 ways to transfer money from one bank to another

Zelle is owned by Early Warning Services, LLC, which is a joint venture between seven of the largest banks in the U.S.: Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo.

As such, you can expect Zelle to use top-of-the-line authentication, encryption, and monitoring features to protect your personal information and keep your payments secure.

That said, the only time you can cancel a payment made with Zelle is if the recipient hasn't yet enrolled with the service. If you've fallen victim to a scam or someone has managed to use the service without your permission, you'd need to report it to your bank or credit union.

Additionally, Zelle doesn't offer any kind of purchase protection for transactions with small businesses.

Read more: Are online banks really safe?

In some ways, Zelle offers a better way to transfer money than other peer-to-peer payment services. However, there are also some drawbacks to consider before using it.

  • Free instant transfers: Zelle doesn't charge fees for using its service, and as long as both you and the recipient are enrolled, the transfer occurs within minutes. In contrast, other money transfer services only allow you to send money on their platforms, and transferring funds to your bank account for free can take a day or longer. If you want instant access to your funds, you'll typically have to pay a fee of up to 1.75% of the transfer amount.

  • Widely accessible: Zelle works directly with more than 2,000 banks and credit unions, making it accessible to more than 100 million people directly through their mobile banking apps. Even if your financial institution doesn't partner with Zelle, you can still take advantage of fast transfers with the Zelle mobile app and an eligible debit card.

  • Balance protection: Because Zelle transfers money directly between users' bank accounts, there's no option to maintain a balance with Zelle that's separate from your bank account. Venmo, PayPal and Cash App all offer this option, but most money held within a money transfer app isn't protected by federal deposit insurance, which covers bank and credit union balances.

  • Limited functionality: Zelle only allows person-to-person transfers between U.S. bank accounts. If you want to add a credit card to make payments or send money to someone internationally, you'll need to use another payment app.

  • No payment protection: Zelle doesn't offer any payment protection beyond the option to cancel a payment to an unenrolled recipient. That's fairly standard for other money transfer apps, too. But if you're transacting with a business, consider using Venmo or PayPal, both of which offer purchase protection on eligible business-related payments.

  • Requires a bank account: Zelle only works if you have a U.S. checking or savings account. Unfortunately, 6% of adults in the U.S. don't have a bank account, according to the Federal Reserve. Other payment apps allow you to transact without a bank account, albeit with some limitations and even offer their own debit cards you can use.

Zelle offers a quick way to send money to friends and family members, and if that's all you need, it can be a solid alternative to other money transfer apps. However, there are some limitations, particularly with payment protection, functionality, and bank account requirements.

To determine if Zelle is right for you, consider your needs and preferences. Depending on the situation, it could make sense to use multiple payment services to meet all of your needs.