How Does Zelle Make Money? [Business Model]

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Zelle is a great way to send money to friends and family, even if they bank somewhere different than you do. They already integrate with a lot of banking apps and allow users to send money without any transaction fees.

So, how is Zelle making money? And what is its business model?

How does Zelle make money?

Zelle makes money by charging a 1% transaction fee to merchants. However, Zelle currently does not earn revenue as it is focused on integrating with all banking apps and acquiring users. The future revenue potential for Zelle is promising.

This is very similar to CRED’s business model which has negative revenue, yet large scale adoption. Let’s explore Zelle in further detail!

What is Zelle?

Host a reunion and you know there’s a lot of budgeting required. Will you pay for everything or will people share the expenses? And if people will share the expenses, how?

Zelle makes it super simple.

It’s a P2P payments app that integrates with your banking apps and makes it super simple to transfer money with 0 fees.

And you do not need an additional app on your phone. It’s right there within your bank’s app!

All you need is the receiver’s email address or US phone number that’s registered with Zelle and you’re ready to pay.

But with 0 fees, how does Zelle support the business? Let’s find that out now.

Also read: How Does Affirm Make Money?

How does Zelle make money?

Currently, Zelle does not make money. It is focused on increasing distribution. They’re trying to gain access to most users who will use their service regularly.

Once a large client base has been acquired, scaling the revenues is a matter of ideating on a great revenue model.

For now, Zelle takes a hit on their revenues by charging no fees from the users or the banks.

It does make money from merchant transactions, however, there is no mention of the same on its websites yet.

Zelle charges a 1% transaction fee for any money received by a business account. Currently, the operational costs of Zelle come from funding from Early Warning Services, Inc.


Let’s dive deeper into the business model of Zelle and understand their idea behind building a completely free service.

Also read: How Does Patreon Make Money? [Updated]

Zelle Business Model – The Idea Behind Zelle

A business model is basically the idea behind the business and how it will be executed to make the business a reality. Zelle is a payments app.

A peer-2-peer payments app that makes transfers between different banks as easy as sending a text message or an email.

Zelle originated as “ClearXchange,” established in 2011 by the Bank of America, JP Morgan Chase, and Wells Fargo.

It was the banking industry’s response to Venmo and PayPal.

Also read: How does BharatPe make money?

1. Zelle makes payments a breeze

Being integrated within bank apps, users do not have to install it separately. Because there’s no friction, users tend to simply start using Zelle.

With that, banks have more transactions occurring on their apps which helps them earn more revenue in fees.

Zelle charges 0 fees at the moment so they’re taking a hit on their revenues. But it won’t be in vain.

The distribution gained at this point will help them raise funds and plan for an exit or create additional sources of revenue in the future.

2. Integrates with existing bank apps

The easiest way to deter a customer is to ask them to change habits. Many other payment apps require users to download a new app, register themselves and get their friends onboard to be able to make payments.

With Zelle, this problem simply doesn’t exist. They partner with banks and integrate the payment feature within the bank apps. The users who already use bank apps see Zelle and can make interbank payments with no additional effort.

3. Offer free service for distribution

When a service starts out, it’s hard for users to trust it. And more so when its in the financial sector. Trials and refund guarantees have become the norm and every user expects to see such options.

Zelle took the free route. They burn invested capital to achieve mass-scale distribution before charging the users. This makes it a no-brainer for banking app users to pay through Zelle.

Zelle’s Marketing Strategy

In a landscape where Stripe and Venme and PayPal co-exist, making users switch to yet another app would’ve required a really strong reason.

Zelle knew this. The founder of Early Warning Services, Inc. (parent company of Zelle) Albert Ko realized they needed distribution to survive.

There was no easy to get the distribution.

So, Zelle found a beautiful hack. They partnered with leading US banks.

Immediately, everyone who used their bank’s apps on the phone was Zelle’s potential customer.

This gave them mass distribution that most other payment apps had to work hard for and yet could not achieve results anywhere close to Zelle.

So within a short span, Zelle had become one of the top payment apps in the US markets.


Zelle has competitors mentioned before. But none of them have the large scale distribution that Zelle could achieve within just a few years of their launch. While they’ve built a foundation for success, the competitors of Zelle below deserve a mention.

  • Venmo. A subsidiary of Paypal that offers P2P transactions
  • Stripe: Directly connects with your bank account to enable merchant transactions as well as P2P payments.
  • PayPal. The first payment system to ever gain mass adoption.
  • Apple Pay. A payments app made for Apple devices.
  • Google Pay. Digital wallet platform and online payment system


And this is how Zelle makes money. A simple, yet elegant business model that is primed for success in the coming years. If you’re interested in more finance apps, you would enjoy reading the how Binance makes money. An app that I use extensively for my crypto investments.