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Business Operations Business Models

How Does Zelle Make Money (Business and Revenue Model)

The Zelle business model

Zelle logo
Here’s what you should know:
  • What is Zelle, and how does Zelle work?
  • How does Zelle make money?
  • By Saving The Banks Money
  • Zelle profit and revenue
  • What is the Zelle business and revenue model?
  • Zelle funding, net worth, and valuation
  • Zelle subsidiaries, acquisitions, and exits

How does Zelle make money without fees and how is it free to use? Well, here is a full, in depth, breakdown of their main revenue stream and services they offer, as well as the Zelle business and revenue model, how much Zelle makes per year, and how Zelle works.

What is Zelle, and how does Zelle work?

Zelle, formally known as clearXchange, is a financial payment service that allows customers to send money directly between almost any bank account in the U.S. within minutes.

Originally founded under the name clearXchange in 2011 by Mike Kennedy, clearXchange went on to get later get acquired by Early Warning Services, LLC on January 12, 2016, for an undisclosed amount.

Since that time, Early Warning Services rebranded clearXchange to Zelle. And in 2021 alone, Zelle customers have sent more than 1.8 billion transactions totaling $490 billion in payment volume.

So, how does Zelle work? To use Zelle, you must have a U.S. checking or savings account and make sure your bank is a part of Zelle’s network.

Once you know Zelle partners with your bank or credit union, you can simply log in to your banks’ mobile app to find Zelle in there or you can download the Zelle app from the Apple App Store or Google Play store.

From there, all you need is the recipient’s email address or U.S. mobile phone number to send money to them. Just make sure the bank account you are sending to is also based in the U.S. You can then enter in the amount you want to send and they will receive the funds within minutes (just make sure they are signed up to Zelle before sending.)

Some of Zelle’s competitors include Cash App, Venmo, PayPal, Skrill, Transferwise, Apple Pay, Western Union, Google Pay, and other peer to peer (P2P) payment services.

Zelle App in Apple App Store | Zelle Business Model | How Does Zelle Make Money | How Does Zelle Work
Source: Apple App Store | Zelle

How does Zelle make money?

According to a Zelle 2021 Press Release, Zelle customers and businesses sent 1.8 billion transactions through the Zelle network totaling $490 billion of payment volume in 2021. Including Zelle’s network of more than 1,000 banks and credit unions and nearly 10,000 financial institutions.

So how does Zelle make money off of all those transactions and payment volume?

Below is a breakdown of how much money Zelle makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here is how Zelle makes money in 2022

Zelle has a revenue model that makes money in just one (1) way; by saving money for the banks.

#1. By Saving The Banks Money

How is saving money for the banks making money for Zelle and the banks?

Well, as noted above, Early Warning Services, LLC, the parent company of Zelle, is co-owned by the seven largest banks in America; JPMorgan Chase, Wells Fargo, Bank of America, Truist, Capital One, PNC Bank, and U.S. Bank.

So since Zelle is owned by the banks, how is it saving them money?

Because the banks who own Zelle are saving money by using their own payment service instead of having to pay another payment service company, such as Cash App, Venmo, or PayPal, for their infrastructure to use within their banking system for their banking customers.

For example, Zelle customers sent 1.8 billion transactions totaling $490 billion of payment volume in 2021.

If the banks didn’t own Zelle, they would be paying one of those other companies a fee and or percentage for each of those 1.8 billion transactions / $490 billion of payment volume their customers sent to each other.

So the bottom line is, because bank-owned Zelle doesn’t charge themselves fees and do not need to pay another company fees to use their payment service, the banks are thereby making money on their bottom line because they are saving more money using their product Zelle.

Zelle banks | Zelle Business Model | How Does Zelle Make Money | How Does Zelle Work
Source: Zelle

Zelle profit and revenue

Zelle has not released any official reports in regards to company earnings.

Note: Because Zelle is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Zelle business and revenue model?

Zelle makes money through a few revenue models that they combine within their company, they are:

  • Fee for service (FFS) business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

Zelle funding, net worth, and valuation

According to Zelle’s Crunchbase profile, Zelle has not raised any funds.

On January 12, 2016, clearXchange (Zelle) was acquired by Early Warning Services, LLC for an undisclosed amount.

Zelle subsidiaries, acquisitions, and exits

To date, Zelle has not made any acquisitions, investments, or exits.