- Key insights: Zelle logged nearly $600 billion in payments through June, according to Early Warnings Services, Zelle's bank-owned parent company.
- What's at stake: Payments to small businesses was the fastest growing use case for the P2P network.
- Supporting Data: More than $108 million was sent in August, according to Zelle.
Peer-to-peer payments network Zelle saw its growth accelerate in the first six months of the year, putting it on pace to surpass 2024's
Zelle tallied a 23% year-over-year increase in payment volume to $592 billion in the first half of the year, ending June 30, according to Early Warning Services, Zelle's bank-owned parent company. Consumers and small businesses sent and received 2 billion payments during that time period, a 36% increase from the same reporting period last year.
Payments to small businesses were the
"The small businesses that we see using [Zelle] really include things like gig workers, contractors, [and] also those independent earners, potentially a landscaper that may have a couple of employees, to even that babysitter or that nanny that's the one person shop," Denise Leonard, general manager of Zelle, told American Banker.
Zelle is targeting micro businesses whose primary need is to move money faster and more efficiently, Leonard said, but noted that Zelle is looking to expand its product and services to small businesses over "the next several years."
That focus on micro businesses is a good fit for Zelle, Jessica Pinkston, a senior director at Cornerstone Advisors, told American Banker. "The fit for Zelle in the small-business space is not for businesses that need a payment platform integrated into their business software solutions, but for small businesses that need a portable payment platform that can be taken to the client site or given to the client."
Merchants, especially smaller ones, prefer Zelle due to the high cost of processing card transactions, said Tony DeSanctis, a senior advisor at Cornerstone Advisors.
"They are also easier to handle than cash or checks. From a merchant perspective it really is a sweet spot," DeSanctis told American Banker. "The open question remains, how many people can we get to adopt Zelle for business as a payment type? Consumers who use credit cards will be hesitant to miss the rewards they get from cards."
Other use cases, including payouts to individuals from small businesses, rent payments and weekend payments also increased in 1H.
Payouts from small businesses to individuals rose by 22%, and the number of rent payments grew by 13%, with the average rate payment rising 5% compared with the same reporting period last year.
Weekend payments rose 18% with the average payment size staying consistent. Childcare payments to babysitters increased 7%, according to Zelle.
The use of Zelle among small and casual merchants is exploding, said Eric Grover, principal at Intrepid Ventures.
"It's instant. It's cheap. And there are no charge-back rights, which is less of an issue if consumers are paying their babysitter, landscaper, barber, or someone they know and regularly transact with," Grover told American Banker.
But Zelle will need to figure out how to integrate with software providers as it looks to push adoption up market to larger enterprises and beyond its
"As you go up in size, the software support becomes more important, because you are dealing with larger numbers of customers and more complex arrangements," McPherson said. "However, Zelle is well positioned to increase share at the bottom of the market, and move up from there."
