Zelle For Business: What Small Businesses Need To Know About The New Money Transfer App

If you own a small business and have a dedicated checking or savings account, now there’s a different way to send or receive money directly from your account. Unlike traditional transfers that can take up to three days, this transfer can be completed within minutes and is often free. The service is called Zelle, and you might already be familiar with it as a money transfer service for one of your personal bank accounts.

Zelle used to be a consumer-only banking service, but recently it’s been opened to small businesses. It’s available at most banks. If you want to learn how to pay or get paid without having to write a check or run to the bank for a deposit — and still be able to use the funds immediately —, read on to learn more.

How Does Zelle Work?

Before we get to the details of Zelle for business accounts, let’s first get a little backstory on how Zelle got its start and how the Zelle technology works.

Origins of Zelle

Zelle is a US-based money transfer service available to those who have a US bank account. It’s operated by a company called Early Warning Services, LLC, which, in turn, is owned by a handful of large banks, including Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, Citibank, and Wells Fargo. In addition, 400+ “member” banks and credit unions participate in the Zelle service. The complete list of member banks can be found on the Zelle website, and if your small business has a checking or savings account at one of these banks, then you can probably use Zelle for your business.

The Zelle service was launched in 2017. There was an earlier version of the service called clearXchange going as far back as 2011, but accounts for personal money transfers were deactivated by December 2017 and users were encouraged to move to the Zelle service.

Zelle is basically a service started by banks, for banks. So, unlike its competitors such as Venmo or PayPal, each member bank has a lot of control over how to offer the service and whether (or how much) to charge for the service. While there is an independent Zelle app, for most users, the service is typically accessed through a bank’s website or mobile app. To sign up for the service or initiate or manage transfers, you log on to your banks’ website or app and access the Zelle service through tabs on the website or in the app. As a result, security features for the service depend on your bank’s security features.

The Zelle Network

Unlike many other money transfer services where you might have to wait up to three days to finalize a transfer, a Zelle transfer can be completed within minutes, and the money can be available for you to use immediately thereafter. This is possible because the banks that offer Zelle are “member” banks and presumably such banks have been vetted and given a greater degree of trust, so they release the money faster. Behind the scenes, Zelle transfers money via the ACH service, which–while it is possible to settle transfers in less than a day–still does not happen within minutes.

In reality, the service works like this:

• Amy initiates a transfer of $100 to Beth through Amy’s banking app or web portal.
• Amy’s bank debits $100 from Amy’s account, sends a message through the Zelle Network to Beth’s bank that $100 is being transferred, and moves $100 to a settlement account.
• Beth’s bank notifies Beth of the transfer, credits Beth’s bank account for $100, and messages Amy’s bank through the Zelle Network that the money has been credited.
• The banks then settle the account through an ACH transfer, which happens at specific times of the day during bank work days.

Can I Use Zelle For Business?

Zelle originally started as a consumer-only service, but, in 2018, it moved to allow small businesses to use the service. If you have a small business checking or savings account, then more than likely you can use Zelle for your business. However, it is possible for some banks to offer Zelle for personal use but not for business use.

If your bank does allow Zelle for small business use, be sure to check restrictions as well as fees for business accounts. They might be different from personal accounts.

Zelle For Business Accounts: What You Need To Know

If you already have a small business bank account, then you can probably already use Zelle. Here’s how.

How To Set Up a Zelle Account

Setting a Zelle account for your business is easy. Typically, a Zelle account can be used in connection with a business checking or savings account. Check your banks’ website to make sure, but if you can use Zelle, you should see tabs and buttons with the Zelle name or logo on the website or in the app.

In order to set up a Zelle account, you must have a cell phone number or email that you can associate with the account. If you already have a personal Zelle account, then you can’t use the same email or phone number for your business account even if your personal account is at another bank. Each Zelle account is uniquely identified with an email or cell number, so you can’t use something that’s already registered with the service. If your cell number is a VoIP number like Google Voice, you can’t use that number with Zelle either.

A unique cell number or email is all you really need. Because Zelle is a service through your bank, they already have your bank transit routing number and account number, so you won’t need to know that. Just follow the simple directions on your banking app or through your bank’s web portal, and you should be able to quickly set up a Zelle transfer account.

You must set up the email or cell number of each and every account you intend to send money to before you can send the money. You can’t just type the email or cell number on the fly and expect the money to be sent right away. The banks want to verify the recipient’s account before actually sending anything.

Here’s a screenshot of the Bank of America Zelle signup page (modified for privacy/security concerns):

What Types Of Transfers Are Allowed On Zelle?

Once you have your Zelle account, you can do two, possibly three things (depending on your bank):

• Send/receive money
• Request money
• Split a bill

In theory, you could use Zelle to request payment from customers, or receive payment from customers, or to pay vendors or partners — among other uses.

The web or app interface typically looks very simple and all you have to do is to follow directions to complete the action. Again, because your bank ultimately controls which activities it will allow, it’s difficult to show the interface here. Below is a screenshot of the Bank of America mobile app for Zelle transfers. It gives you an idea of what you’ll typically see.

Are There Any Transfer Limits Through Zelle?

There are indeed transfer limits through Zelle. Each bank decides how much that limit is, but typically there’s a limit on the amount and the number of transfers per day/week/month. For instance, Bank of America’s transfer limit is as follows:

So, in one 24 hour period, you can make one $3,000 transfer or 10 $300 transfers. The same goes for the 7 days and 30 days limits. On the Bank of America website, they specifically mention that a small business might receive a higher limit.

Again, because many details of Zelle are controlled by each member bank, be sure to check your bank’s specific number on daily, weekly, and/or monthly transfer limits.

Lastly, note that a transfer limit typically applies to outbound transfers. Usually, banks do not put a limit on how much you can receive through Zelle.

How Much Does It Cost To Transfer Money Through Zelle?

How much it costs for a business to transfer money through Zelle depends entirely on your bank. For instance, Bank of America charges no fees for your business to send or receive money through Zelle.

However, at US Bank, while there is no fee for a business account to send or request money through Zelle, there is a fee to receive money through Zelle. Each inbound transaction costs 2.5% of the transaction amount, with a $15 maximum or a $0.25 minimum per transaction. Given the different fee structure, before you start using Zelle for your business, be sure to do a little research through your bank’s website to find out for sure.

Are There Any Transfer Restrictions Through Zelle?

There is one transfer restriction for business accounts that does not apply to personal accounts. Some consumer users of Zelle bank at non-member banks. They can still use Zelle through the Zelle app by linking their debit card to the app. While this method of using Zelle is fine for personal accounts, businesses can’t send or receive money to this type of Zelle account. In order to use Zelle for business, you must bank at a Zelle member bank and receive and send money to only those who also bank at a Zelle member bank.

Protection For Fraudulent Transfers

Zelle transfers are more like debit card transactions than credit card transactions, so the legal protections available for credit card transactions do not apply to Zelle.

Zelle essentially is an ACH transfer between banks. As such, once that money is transferred, you can’t pull the money back except under very specific circumstances. You can stop the transfer if the other party doesn’t have a Zelle account and before they set one up. Otherwise, if you accidentally send money to the wrong account because of a typo, you would have to call your bank to see if they can pull the money back.

Like all ACH transfers, there is otherwise no protection for fraud, so most banks warn Zelle users to only send money through Zelle to parties they trust and carefully guard access to the Zelle account in the first place.

Zelle VS Other Mobile And Digital Wallets

Zelle was set up by the big banks to compete with mobile and digital wallets like Venmo and Cash App. There are differences between the services, and one of the main ones is that, with Venmo and Cash App, there’s an extra step to get the money into your bank account.

Zelle is a straight bank-to-bank transfer, so the money lands directly into your bank account and you can use it right away. With Venmo, Cash App, and others like PayPal, the money rests with each of these businesses. If you wish to take that money out for other general use, you must first transfer it to your bank. Typically, this is done through an ACH transfer that could take up to three business days.

Other than this main difference, as already discussed earlier, Zelle allows each member bank a great deal of control over how to operate the service and how much, if any, to charge for the service. In other words, if you have several Zelle accounts at different banks, you’ll have to pay attention to the differences between the services in order to not encounter any surprise charges or daily/weekly/monthly transfer limits.

Is It Time For Your Business To Start Using Zelle?

There are definitely advantages to using Zelle for your business. Fast transfer and immediate availability of funds are extremely convenient if you’re receiving payment. However, because ultimately your bank controls how many services they wish to provide through Zelle and how much they wish to charge, always double-check with your bank before you start any large-scale uses of Zelle.

As to how to use Zelle, you can, of course, pay or ask to be paid through Zelle. Simply provide the email or cell number you’ve associated with Zelle on your invoice and let your customers know you can take Zelle as well. You can also see whether the service providers and vendors you work with prefer to be paid through Zelle.

As a business owner, sometimes you can also transfer money to and from your personal and business accounts through Zelle (owner’s draw or increase in owner’s equity). The transfer is fast and you won’t have to write yourself a check or pay for a wire transfer.

All in all, while Zelle is not a complete solution for taking or making payments, it can do a lot. So why not try Zelle for your business? It’s fast, it’s often free, and it’s probably already available through your bank, just waiting for you to set it up.

How do you use Zelle? Leave us a comment and share any innovative ways to use the service!