The news: Wells Fargo and Bank of America are reportedly among banks considering a plan to enable Zelle for online retail payments at big merchants, per the Wall Street Journal.
More on this: Not everyone is on board with the plan—some JPMorgan executives said it’s not the right time for such a plan, people familiar with the matter told the Journal.
The executives said Zelle should focus on protecting against consumer fraud, which has proliferated on the peer-to-peer payment (P2P) network. And regulatory gray areas mean victims often struggle to get banks to refund them for fraudulent charges and scams, the New York Times reported.
But other banks support the plan because it could let them set their own rules and fees for payment acceptance. These banks can participate in the scheme individually but would need to get a vote from Zelle’s owners before activating the service across the entire network. Zelle is operated by Early Warning Services, which is owned by seven banks—including JPMorgan, Bank of America, and Wells Fargo.
Why it matters: Zelle adoption is surging—the number of users is expected to grow 13.8% year over year and hit 61.6 million in 2022, per Insider Intelligence forecasts.
But card payments still hold the upper hand: Cards are expected to make up 84.5% of digital retail & food services transaction value this year, per Insider Intelligence forecasts. And banks earn income from interchange and other fees (which are set by networks like Visa and Mastercard) on card transactions, unlike with current Zelle transactions.
So why would banks want to risk this income in exchange for a less lucrative service?
One Liberty Plaza9th FloorNew York, NY 100061-800-405-0844