Zelle, launched in June 2017, is a peer-to-peer (P2P) payment system used by many banks. This P2P system is very easy to use, but its simplicity can also make it more vulnerable to scams.
If you’re already using Zelle or planning to use it, here’s what you need to know.
What is Zelle?
Zelle is a P2P payment system that allows you to send or receive money from one person’s bank account to another person’s bank account. Previously, both parties needed to be registered with Zelle in order to use it, but now only one party needs to register with Zelle. The sender and recipient do not have to use the same bank for a Zelle transfer to work.
If your bank offers Zelle – over 1,000 financial institutions are currently part of its network – you can activate it through your bank’s app. You simply sign up for Zelle and link it to your bank account or debit card. If your bank does not offer Zelle, you have the option to download the standalone Zelle app, available for iPhone and Android devices, and link it to your debit card.
How Zelle works
Using Zelle is pretty easy – it works just like other P2P systems like Venmo or PayPal. To send money or request money (invoice), you need the email address or phone number that your recipient uses to identify their Zelle account.
It’s important to remember that Zelle is designed to pay or receive payments from others – you can’t use it to shop online or in physical stores. However, some small businesses may use Zelle to pay contractors or receive money from clients; service providers can use it as a business tool.
Zelle payments can be instant, which is why it’s so important to check all the information and double-check the amount before sending money (we’ll explain why this is important shortly).
When it comes to how much money you can send and receive through Zelle, your bank will set any limits. Some banks set daily, weekly and monthly limits. You cannot subscribe to the service with a credit card; instead, you must link a bank account or debit card to your account.
How much is Zele worth?
If you access Zelle through a bank, that institution sets any fees applicable to the use of this payment processor. However, signing up and sending and receiving funds through Zelle is free. Where you may encounter fees if your bank charges them.
Sending and receiving requests through the vast majority of banks is free, but you should check with your bank about what potential fees you may face before you start using Zelle.
If you are using the offline application, you will not be charged for opening an account or for sending or receiving money.
Why you need to be careful
You might be wondering what happens if you accidentally send the wrong amount or send it to the wrong person. “Today, payment is irrevocable,” says Chris Ackroyd, director of payment products for Early Warning Services. “Once this payment is gone, you can’t get it back.”
As is the case with many P2P payment systems, there is no guaranteed way to get money back once it has been sent. Although you have some legal remedies, getting money back if you send it to the wrong person is not easy.
If the payment “goes to the wrong person, you have federal rights,” says Lauren Saunders, deputy director of the National Consumer Advocacy Center. The same thing happens if you send the wrong person or the wrong amount, she adds. “It’s a mistake that’s covered up, and [the laws] apply.”
Cristina Tetreo, consumer union staff lawyer, agrees. “Is this clearly covered by the law? Yes, she explains. However, suppliers do not always comply with the requirements. “We have seen people complain about sending money to the wrong person, and there seems to be no reliable way to get that money back,” adds Tetro. “We believe that service providers should help consumers get that money back.”
Consumer advocates would also like to see additional levels or hints to help consumers detect misdirected payments before they are sent, Tertro said. In addition, some banks include steps in their send/request processes so that users can ensure that they are sending money to the correct recipient.
If you are sending money to the wrong person, Zelle advises you to cancel the payment, but this will only work if the recipient is not already registered with Zelle. If the recipient is already registered with Zelle, the payment cannot be canceled after it has been sent, as it goes directly to their bank account.
How to protect yourself when using Zelle
To avoid accidents, it’s a good idea to make sure that the recipient’s phone number or email address not only belongs to him, but also matches the one he uses in his Zelle account. Because Zelle identifies users by phone numbers or email addresses, these forms of contact information act as unique identifiers. For further confirmation, Ackroyd recommends sending a small amount of 50 cents or $1 first to make sure the right person is receiving it.
When it comes to cheating, your rights are a little clearer. Zelle transactions are subject to the Electronic Funds Transfer Act. If your bank account is hacked or someone you never authorized uses Zelle to withdraw money from your account, your bank must refund you if you report the loss in a timely manner.
However, depending on the bank, you could lose money for up to 10 days while the bank investigates, and if the bank decides you authorized the payment, your loss could be permanent. Also, the law does not necessarily protect you if your purchase is defective, fraudulent, or not what was promised.
When it comes to sending payments to people you don’t know, Zelle discourages doing so, stating on its FAQ page, “Zelle is a great way to send money to friends, family, or other people you trust, like your personal trainer.” . , nanny or neighbor. If you do not know this person or are not sure that you will get what you paid for (for example, goods purchased from an online bidding or sales site), we recommend that you do not use Zelle for such transactions, which pose a potentially high risk.
After all, you should only use Zelle if you’ve already received the goods or services, and only with people you know and trust. You should never give anyone else access to your Zelle account.
bottom line
If you use it right, Zelle can be a handy financial tool to carry around in your back pocket. The key to successfully using Zelle is to make sure that both parties provide the correct account information and take the necessary steps to ensure that the sender is transferring money to the correct recipient.
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