Zelle is getting down to business.

Peer-to-peer payments network Zelle is looking to expand its business-to-consumer offering to service corporate customers turning to Zelle to disburse consumer payments electronically, according to Wells Fargo & Co.

Wells is a member of the Zelle consortium, Early Warning Services.

“Not only we, at Wells Fargo, but Early Warning and its network banks have seen a significant increase in businesses using disbursements with Zelle,” said Michelle Ziolkowski, head of global payables in treasury management at Wells Fargo.

Since the start of the pandemic, there has been a 250% increase in new business customers signing up for Zelle, and a 125% increase in B2C transaction volume, Ziolkowski said. Zelle competes with Venmo and Square’s Cash app.

As more businesses turn to Zelle’s digital network to disburse payments, Early Warning — which owns Zelle along with Wells, Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank and US Bank — is exploring how to integrate more business-specific features on the network known for peer-to-peer payments.

“In a recent ‘rule of change’ at Early Warning, they enabled the capability [for consumers] to pay small businesses, so we’ll start to see some adoption of consumer-to-small business through Zelle as a channel,” Ziolkowski said, declining to disclose timeline details.
There are 766 financial institutions contracted to use the Zelle network, which processed $187 billion in payments last year, a 57% year-over-year increase, according to Early Warning data.

The biggest challenge for Zelle as it ramps up its business-to-consumer offering and develops its consumer-to-SMB product will be changing the perception that Zelle only offers P2P payments, Ziolkowski said, noting that competitors, including PayPal-owned Venmo, already offer such business products. Another will be enrollment, she said, adding that businesses are concerned recipients may not have Zelle accounts, and therefore can’t accept the payment. As such, Early Warning is boosting its enrollment notification efforts to alert consumers and businesses not yet onboarded to the platform that there is money waiting to be deposited, she said.

As more businesses turn to electronic payments, Wells Fargo has seen an improvement in processing efficiency and increased fraud awareness and mitigation for digital payments funneling through the bank’s automated fraud processes, Ziolkowski said.

That said, the bank is still required allocate resources into the infrastructure needed to process paper checks. “There’s still so much required in the financial services infrastructure that support those payments, that we are a little bit away from being able to realize the cost-savings from the move and adoption to electronic payments,” Ziolkowski said.

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