Zelle ventures into charitable disbursements with Bank of America

• Key insight: Zelle, with Bank of America, has added charitable disbursements as a new use case for its seldom-mentioned disbursement business. 
• What's at stake: The bank-owned instant payment network wants to be in more corridors where money moves. 
• Forward look: Zelle this year will also focus on developing international stablecoin payments, new features for small businesses such as QR codes.

Zelle is giving its seldom-mentioned disbursement business a little bit of love.

The instant payment rail has teamed up with Bank of America , one of its seven bank owners, to build out charitable disbursements from donor-advised funds, a new use case for the network.

Donor-advised funds are a tax-advantaged, personalized account for investing and distributing charitable donations. Historically, disbursement payments to charities happened over ACH or check, Adam Klappholz, Zelle's head of product, told American Banker.

"Think about how miserable and terrible this was for the charities. They had to wait for someone to write the check. They had to wait for the check to be passed in the mail. They had to hope that the check wasn't lost in the mail," Klappholz said. "For a charity that's doing refugee relief, the timely access to funds is essential if you're going to be able to then deploy them in the field."

The proof-of-concept was with Bank of America's Charitable Gift Fund, which the bank hopes will be a bellwether for other banks that have a donor-advised program to adopt the use case, Donald Greene, a donor-advised fund executive at Bank of America Private Bank, told American Banker.

"What we see is very expandable to the broad universe of banks and centers over time," Green said. "It's almost like opening up the first telephone or cell phone. If only one person has a cell phone, it's not going to be super productive. But if other senders, other receivers, everybody else is accessing that same safe, secure, confirmed network, the magnitude impacts can be magnificent."

An exercise in KYC

For Bank of America, the task of developing payment flows between donor-advised funds and the charities receiving those funds was an exercise in know your customer.

Bank of America built a construct with Zelle for how to verify the sender and recipient beyond Zelle's normal cell phone and email open registration process, Green said.

"That's really where we've come down to the defined sender groups and the defined recipients that are all rooted in the intense knowledge of the KYC requirements of the banks, where the banks are hosting those receipt accounts for charities," Green said. "That's really the root in the ability to tie those things together. That's been the core difference."

To send money to charities the bank uses Zelle's core rails, but also sends reporting to the recipient charities around the grant, Greene said.

"If you send money to me and you're paying me back for whatever, there's no need for a lot of detail," he said. "Grants may well have a lot of information that's required. People want to be acknowledged. There could be a desire to have the money restricted in certain ways or used or deferred or whatever it might be. That's super critical, super important, and frankly, embedded in part of the legality of both receiving the asset and then making use of it."

Last year, Bank of America's Charitable Gift Fund distributed more than $1.3 billion to nonprofits through more than 100,000 grants, the bank said.

Growing the network

For Zelle, the move is the latest in its efforts to expand beyond its historic peer-to-peer beginnings – of which it has achieved critical mass – and its burgeoning small-business payments business. Zelle processed $1.2 trillion in 2025, up 20% over 2024, across 4.2 billion total payments; $400 billion of SMB payments was processed last year.

"It's a really good foray into driving Zelle acceptance," Tony DeSanctis, senior advisor at Cornerstone Advisors, told American Banker. "Depending on how far down the rabbit hole you want to go here … it's a gentle dip of the pinky toe into the water of merchant acceptance, if you want to think about it that way. It is sort of a proof of concept to say, 'How many merchants charities can I get to accept Zelle as a payment type, and can I drive adoption of Zelle as a result of this initiative?'"

Ultimately, Zelle wants to be in many more of the corridors where money is flowing, Klappholz said. To that end, Zelle has been working on ways to build out its SMB products to entice more to join the network. In Q4 of last year, it rolled out SMB tags, an alternative way for small businesses to receive payments outside of the traditional phone number or email identifier.

This year, Zelle is focused on building out its stablecoin offering to enable cross-border payments on the network. The company also wants to build out QR codes and request for payment functions for SMBs.

"We are trying to figure out how we can pass along the right data, pass along the right signals, use the right models, so that we can safely work with the banks to institute limits that are fit for purpose, fit for the risk profile and fit for the right transaction," Klappholz said.