How Does Zelle Make Money? (2023 Update)

how does zelle make money

Zelle is an interesting animal in the financial world because it was founded together by the largest financial institutions in the US. It helps you make instant transactions with other people you know and with small businesses. However, does Zelle make money to its owners?

Zelle was developed to offer free transactions between personal, and later, small business bank accounts. Because all the transactions are free to users, the service isn’t really making any major money except the one provided to it by its founders – major US banks.  

Continue reading to find out all about Zelle, what institutions are using it, who are its founders, and why it doesn’t really have to make money. 

It’s an interesting insight into how competition brings more benefits to customers but also a cautionary tale on how these services can be used for scams. 

About Zelle 

Zelle is a digital payments network that was launched as clearXchange in 2011 by Bank of America, JPMorgan Chase, and Wells Fargo.

The service was rebranded as Zelle in 2017 after being sold to Early Warning Services, a private financial services company owned by:

  • Bank of America 
  • Truist
  • Capital One 
  • JPMorgan Chase 
  • PNC Bank 
  • U.S. Bank 
  • Wells Fargo

The service has become such a powerhouse that almost $500 billion were sent using Zelle in 2021. That’s an increase of 59% year-on-year and the service is now reportedly a market leader. 

Is this surprising? Hardly. It helps when you’re founded and backed by the top financial institutions in the country. 

What Does Zelle do? 

Zelle is marketed as a way to send money to friends, family, and businesses; the ones you know and trust even when they’re using a different bank than yours. 

Sending money with Zelle is straightforward because it’s already a part of most banking apps on the market and there’s no need to download and install a separate app. 

You can transfer money to another person even if they don’t have a Zelle account. In that case, they will first have to sign up for Zelle to get the money. This will prolong the time to receive the money for up to three business days. 

Typically, Zelle money transfers occur in minutes and can’t be canceled or reversed. The speed is one of its best features but it can also be used against its users.

Zelle Controversies

Zelle, and other financial apps with instant transfers, are increasingly being used by scammers to siphon money out of peoples’ accounts. 

It seems that it’s all too easy to open an account in another person’s name or to get their password via the “forgot password” feature. 

The scammers use social engineering to trick people into, for example, telling them their username and passcode sent by the bank. The phone call and text or email message will look like it’s coming from the user’s bank. 

In less than 5 minutes, a person could lose thousands of dollars via Zelle as it gets siphoned out of their bank account. 

In many cases, the person getting scammed has never even heard of Zelle or its ability to move money that way. We already covered the most popular scams on Zelle, Cash App, Venmo, and Chime if you want to find out more.  

RELATED: The 5 Most Common Zelle Scams (And How To Stay Safe)

Which Institutions Use Zelle?

Zelle is a part of more than a thousand banking apps in the US. That’s an incredible number and in reality, only Zelle’s direct competitors don’t have Zelle supported in their apps. 

There’s really no point listing Zelle’s partners as they include who’s who of the financial world such as Visa and Mastercard, processor partners Fiserv, FIS, and Jack Henry & Associates as well as technology partners CGI, IBM, ACI Universal Payments, and DB Banking Technology. 

We already mentioned that all major US banks support Zelle and have it integrated into their apps, many of whom even founded the service. 

READ ALSO: Does Zelle work internationally?

How Does Zelle Make Money? 

It’s important to reiterate that Zelle wasn’t developed to make money. It was, however, created to offer customers free and easy money transfers and to attract new banking customers.

It was also used to prevent existing customers from jumping ship to other apps like Cash App, Venmo, Chime, Varo, and others. That was less successful as we now know that these digital banks have 100+ million of customers combined. 

Because it’s offering a free service, it’s completely reliant on its founders for financial support and on funds from its owner’s other business ventures. 

Zelle’s owner is Early Warning Services, LLC. A fintech company owned by the seven largest banks in the US. It has numerous other products, apart from Zelle, that include:

  • Identity Chek Service Alerts
  • Expand Credit Insights
  • Account Locator & Asset Search And Verification Service
  • Verify SSN (ECBSV)
  • Deposit Chek Service
  • Payment Chek Service
  • Account Owner Authentication (AOA)

A company will often have an app that will serve as a proverbial foot in the door and lose money on it while making money on other apps or premium products. It can also utilize the trove of data acquired from free users to sell it to other companies. 

I don’t believe that’s the case here and I believe Zelle was only developed out of the need for big banks as the competition was starting to eat away at its customer base. 

READ NEXT: Cash App Vs. Zelle (A Quick Guide With Table)

Does Zelle Report Your Transactions to the IRS?

With the recent reports that all transactions over $600 would be reported to the IRS, you’ll be happy to know that Zelle won’t be reporting them, or any other transactions, for that matter. 

The law that mandates other payment networks to provide 1099K forms doesn’t apply to Zelle and it’s your obligation to report any taxable payments to the IRS.   

The same goes for small businesses and any sales of goods and services via the Zelle payment network. 

Zelle Alternatives 

Although it’s now the largest payments app in the US, Zelle has many competing apps and networks with tens of millions of users and counting. 

Consumers, especially the younger demographic, are opting out of big banks and joining digital banks that more often than not, don’t have any fees and offer free (or cheap) cash transfers. 



Let’s start with Venmo that’s owned by PayPal and has a social aspect to its money transfers because, by default, everyone can see what you’re buying or who you’re sending your money to. You’d think that most people wouldn’t like that but Venmo has 80+ million active users. 



PayPal is still the number one choice for money transfers and online payments worldwide despite it having many competitors in the US and internationally. PayPal is often the only choice for making payments, apart from using your credit card or Apple and Google Pay. 

Cash App 

cash app

Cash App is another P2P mobile payments service available here in the US as well as in the UK. It was launched in 2013 by Square, Inc. Block, Inc. and has almost 40 million users; 7 million owning their debit cards for payments.



Wise is arguably the best way to transfer money abroad because it uses the real exchange rate without enormous markups. Its account has no maintenance fees, and you can seamlessly receive your salary, pension, and other direct payments to your account.


Zelle has a clear purpose, to make money transfers seamless between banks and to offset digital banking competitors that came knocking on the doors. 

As such, it’s fulfilling its purpose and doesn’t need a way to earn substantial amounts of money as long as it’s backed by its owners – the largest banks in America.  

If you’re interested in how Zelle’s competitors, digital banks, are making money, go read our article How Do Digital Banks Make Money?

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