Zelle is a money transfer service that businesses can use to make and receive payments. Our guide tells you how to set up and use Zelle For Business.
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A Zelle business account offers businesses a promising alternative payment method. Namely, Zelle bypasses the need for credit card payments and digital wallets such as PayPal. Instead, businesses can use Zelle For Business to request or receive funds directly from customers and send or request payments from vendors and contractors.
However, Zelle For Business offers only limited payment processing services. Access to the service and features depends on which bank you use, and Zelle is only available within the US.
Here, we’ll show you what Zelle For Business is, what services it offers, what it costs, and what you need to be able to use Zelle For Business.
Table of Contents
- What Is Zelle?
- How Can I Use Zelle For Business?
- Banks Offering Zelle For Business Accounts
- How To Set Up A Zelle Business Account
- Alternatives To Zelle For Business
- Beware Of Zelle Business Account Scams
- Is Zelle The Right Choice For My Business?
What Is Zelle?
Zelle is a real-time peer-to-peer (P2P) transfer service that transfers payments between consumers using hundreds of pre-vetted banks that are part of the Zelle processing network. You can access Zelle using your bank’s online banking app or the standalone Zelle app.
Zelle users can send or request money using the email address or phone number associated with their bank account. The other party receives a text or email from Zelle letting them know about the payment or request. If the person has a bank account with one of Zelle’s participating banks or credit unions, they can quickly sign up for Zelle through their bank or credit union’s mobile app or website.
How Can I Use Zelle For Business?
Zelle supportspersonal and businesstransactions. You and your customer(s) will need access to Zelle, which shouldn’t be a problem since most major US banks already use the Zelle network. Before getting started, you should set up Zelle For Business using your business banking account, business credit card, and a different email address and phone number from your personal ones.
The main difference between using Zelle for business transactions and personal transactions is that personal transactions are free; business transactions may have fees imposed by one or both banks involved in the transfer of funds. You’ll want to confirm your bank’s policies on using Zelle For Business, as not every bank in the Zelle network supports this use. Also, banks supporting Zelle for business transactions will usually have maximum transfer limits and possibly transaction fees.
Here are the main considerations when using Zelle for business purposes:
Pros
- Nearly-instant funds transfers
- No transaction processing fees (some banks)
- Transactions are very secure and FDIC-insured
- Contactless payment method
- Available through most major US banks
Cons
- No buyer purchase protection
- Only available in the US
- Only supports transactions in US dollars
- Transaction fees may apply (with some banks)
- Usually subject to maximum transfer limits
In some ways, Zelle has similarities to third-party money transfer apps such as PayPal and Venmo. However, like ACH, it relies upon the customer’s bank account rather than a digital wallet. Zelle transfers are faster than ACH payments, which may be an incentive for some users who need their funds quickly. (We have a post on what an ACH payment is and how they work if you need a quick course on them.) However, speed shouldn’t be the only factor in deciding whether a Zelle business account is right for you.
Using Zelle For Business
Zelle For Business is quick and convenient for a variety of business use cases. While nearly any business can incorporate Zelle as part of its payments strategy, it works best for the following types of businesses:
- Freelancers or independent contractors
- Service industries (e.g., gardeners, house cleaners, etc.)
- Home contractors (e.g., electricians, plumbers, etc.)
- B2B payments to contractors or vendors
- Nonprofits
- Businesses that only occasionally accept non-cash payments
- Any business that needs to receive a disbursem*nt from another organization
In general, Zelle is a great option for small businesses that need to accept payments in the field but don’t want to rely on a bulky wireless credit card terminal or other types of mobile processing systems. It’s also a great alternate payment method for any business that relies on invoices to get paid.
In addition to accepting payments from your customers, Zelle can be used to receive disbursem*nts from an organization, company, or government institution. Simply provide either the email address or US mobile phone number you used to set up your Zelle account to the entity that is going to pay you, and the funds can be deposited directly into your business banking account. Potential use cases include receiving insurance claim payouts, income tax refunds, B2B payments, and more.
However, Zelle doesn’t work for international transactions. It will also be very unwieldy for any high-volume business that processes a large number of transactions daily.
Zelle for Business is best suited to home-based and very small mobile businesses but doesn’t have a built-in invoicing feature. (However, you can send an invoice using a third-party service and include information for the customer to pay the invoice using Zelle.) Because you’ll be working with phone numbers and emails to handle transactions, it’s the kind of payment method you want to use when you can see and interface with your customers to build trust.
Note that although it’s technically possible to use Zelle for payroll, we strongly recommend against this practice. Zelle is not intended to function as a payroll service and does not report transactions to the IRS, including payments over $600. Employers are, however, still responsible for reporting this information to the IRS on their own and could be charged with tax evasion for failure to do so.
Zelle is a promising service, but it’s not a great solution for established businesses needing to process a steady volume of payments. If you’re looking for an alternative to credit card processing, ACH payments are still the most viable option. Check out our list of the best ACH payment providers to get started with affordable, reliable bank transfers. Many of these providers also offer integrated credit card processing at competitive rates as well!
Using Zelle For Nonprofits
Zelle can be a great option for nonprofit organizations that operate on a shoestring budget and are constantly looking for ways to cut costs. Because there are usually no fees to accept donations via Zelle, a nonprofit can save on processing costs and allocate more of the donated funds to its mission. Offering additional payment methods like Zelle can also increase the overall volume of donations your nonprofit receives.
At the same time, you’ll want to consider the lack of buyer protection for Zelle transactions. While people will rarely want to rescind or cancel a donation, they may wish to change the amount or have it come out of a different account. You’ll want to establish clear policies for dealing with these kinds of situations before you start accepting Zelle payments.
Banks Offering Zelle For Business Accounts
Hundreds of banks across the US are part of the Zelle payment network, although it’s important to note that not all of them offer Zelle For Business accounts. Some of the banks that offer Zelle For Business are Bank of America, Capital One, and Wells Fargo. Other best-known banks that offer Zelle For Business are:
- Ally Bank
- BMO Harris Bank
- Chase
- Citi
- Discover Bank
- Fidelity Bank
- Morgan Stanley
- PNC Bank
- US Bank
- USAA
You can use Zelle For Business through either the proprietary Zelle mobile app or your bank’s mobile banking application. Several well-known banks and credit unions currently partner with Zelle but don’t yet integrate Zelle with their banking app (including Morgan Stanley and several others).
Zelle is operated by Early Warning Services, LLC, a consortium owned by several of the largest banks in the US, including Bank of America, Wells Fargo, Chase, and several others. However, a bank doesn’t have to have an ownership stake in the company to use Zelle.
Keep in mind that the above list of participating banks isn’t exhaustive; check with your bank to see whether it supports Zelle For Business and integrates Zelle transfers with its mobile banking application.
Do I Need A Business Bank Account To Use Zelle?
Your customers don’t need a business account to make payments to you. However, there are some other limitations on accounts: business accounts cannot send or receive money from personal accounts that have enrolled in the Zelle app with only a debit card. For both you and your customers, enrolling in Zelle requires that you provide both a bank account number and a routing number.
You, on the other hand, will need a business bank account for your Zelle account. For additional information on business bank accounts, please consult our post on how to open a business banking account. If you don’t have your own business checking account yet, don’t worry. The process isn’t hard, but it helps to be prepared.
First, make sure you double-check and have all of the documents needed to open a business bank account.
After that, you can assess which bank might be the right fit for your small business by reading about our best options for business bank accounts.
How To Set Up A Zelle Business Account
Setting up a Zelle account for your business is easy. In fact, it’s pretty much a one-two-three process that you can complete in a matter of minutes.
Before you get started, double-check with your bank that you can use Zelle with its mobile banking app or online banking service, and confirm that you have a cell phone number or email address that you can associate with your new Zelle account. Note that you cannot use the same email or phone number for your Zelle business account that you already use for your personal Zelle account.
Now that you’re ready to upgrade to a Zelle business account, follow these three simple steps to get started:
- Access Zelle by enrolling an eligible US phone number or email address through your bank’s mobile banking app or directly through the Zelle mobile app.
- Once you’re signed up, enter your recipient’s email address or US mobile phone number through your mobile banking app’s integrated Zelle service or the Zelle app.
- Finally, choose the amount of money you want to send your recipient, whom Zelle notifies with instructions to claim their funds once you transfer the money.
Zelle Pricing & Fees
Zelle currently charges no fees to receive funds or transmit them to individuals or businesses. This policy applies to sending or receiving money with Zelle through a participating bank’s mobile banking app and online banking service. However, Zelle recommends that users confirm with their bank or credit union that they don’t need to pay additional fees for using Zelle, as some participating banks might charge such fees.
Zelle Payments Transfer Limits
Zelle’s transfer limits vary depending on a user’s participating bank. Typically, though, there’s a limit on the amount and the number of payment transfers users can send per day, week, and month. For example, Bank of America’s transfer limits for small businesses are as follows:
| Time Period | Dollar Amount | Total Transfers |
|---|---|---|
| 24 hours | $15,000 | 20 |
| 7 days | $45,000 | 60 |
| 30 days | $60,000 | 120 |
Referring to the above example, small business users can process a single $15,000 transfer or 20 $750 transfers in a 24-hour period. The same goes for the seven-day and 30-day limits.
Remember that since member banks control many details of Zelle, including transfer limits, it’s important that you verify what your bank’s specific limits are for daily, weekly, and monthly transfers.Lastly, note that a transfer limit typically applies to outbound transfers. Usually, banks don’t limit how much you can receive through Zelle.
Alternatives To Zelle For Business
If your business needs don’t match up with any of the common use cases we’ve outlined above, you still have other options.Spurred on by the surge in eCommerce transactions during the COVID-19 pandemic, alternative payment methods have flourished recently. Today, your customers have more ways to pay you than ever before. Each method offers its own unique features (and shortcomings), but all of them have the potential to improve the cash flow of your business.
Venmo
Venmo is similar to Zelle in that it’s also an app-based peer-to-peer (P2P) transfer service. However, it’s more developed for business use than Zelle.
Merchants can create Venmo For Business profiles, which helps to keep your personal and business transactions separate. Venmo isn’t free if you use it to accept a business transaction. You’ll have to pay 1.9% + $0.10 per transaction for purchases made using the Venmo app and a QR code or 3.49% + $0.49 per transaction for purchases made online or in-app using the Braintree gateway or PayPal Checkout. These fees give your customers buyer protection, which can be useful in the event of a mistaken or disputed sale.
You’ll still have to apply any applicable sales taxes manually, and there’s no support for recurring billing. Like Zelle, Venmo doesn’t directly support the use of payment links. However, you can send a QR code via text or email to facilitate payment. Although it’s not free, Venmo is a better choice for merchants who need to accept a lot of in-person transactions.
Cash App
Square’s Cash App For Business is also similar to what Venmo offers in that it allows you to use Cash App’s P2P transfer service for business transactions.
Business transactions aren’t free — you’ll pay 2.75% per transaction. There’s also a 1.25% fee (minimum $0.25) on instant deposits if you want your money right now.
As with all of these services, there are limits on how much money you can send, both in a single transaction and within a certain amount of time. However, there are no limits on how much money you can receive.
One advantage Cash App has over other P2P competitors is that it integrates with the Square payments ecosystem, so you can accept credit card payments directly by using one of Square’s mobile card readers or terminals. However, you’ll still be responsible for calculating and applying sales tax, and you’ll mostly be on your own when it comes to reporting business income. Cash App only generates a Form 1099-K if you have over $20,000 in transactions in a calendar year (less in some states).
Cash App works best for businesses that already have a Square account to accept credit card payments, although its processing fees are on the high side compared to what you’ll pay elsewhere.
Apple Pay
Apple Pay is another great alternative payment method for merchants who want to maximize the number of ways they can accept payments from customers.
There are no additional fees to use it, enhanced payment security is built-in, and it’s quicker and more convenient to process a sale than traditional credit/debit card acceptance methods, such as magstripe and EMV. However, it won’t replace your existing merchant account (if you have one).
For starters, you’ll need an NFC-compatible terminal or mobile card reader to accept in-person transactions. Your customers will need an iPhone or Apple Watch with their payment card information stored in Apple Wallet. Online transactions are also supported, and customers must use their Apple devices to authenticate Apple Pay transactions with either Touch ID or Face ID.
Almost all merchant services providers today support Apple Pay and offer compatible terminals, so it’s a great addition to your arsenal of payment methods. Note that you’ll also want to include support for Google Pay and Samsung Pay for your Android-using customers.
Wave Payments
If you already use Wave for your business’s accounting needs, the optional Wave Payments service can be a great addition to your stable of supported payment methods.
Wave Payments is essentially a third-party payment processor, similar to Square or PayPal. Like other providers of this nature, Wave Payments uses a pay-as-you-go billing system with no long-term commitments and a flat-rate pricing plan for credit and debit card transactions. Visa and Mastercard credit/debit card transactions all cost 2.9% + $0.60 each to process (3.4% + $0.60 for American Express). Wave Payments also supports ACH transfers, which cost1.0% each ($1.00 minimum).
While its transaction processing rates are on the high side, the lack of a monthly fee (unless you’re also using Wave Payroll) makes it a very affordable option for many small businesses. The primary advantage of using Wave Payments is that your transaction information will automatically integrate with Wave’s accounting service. However, you could also accept payments using Zelle, Venmo, or Cash App and manually enter this information. The practicality of this solution will depend on how many transactions you accept every month that require manual entry.
Beware Of Zelle Business Account Scams
Unfortunately, Zelle has been in the news recently for some not-so-great reasons.
Specifically, its lack of buyer protection has quickly made Zelle a popular tool for online scammers, con artists, and cyber thieves. If someone can reach you on the phone and convince you to send them money through Zelle for any reason, you have no recourse whatsoever once you discover that you’ve been scammed. Your bank will not refund your money — period.
While this issue doesn’t directly affect your ability to receive legitimate payments from your customers, be aware that many of them will be understandably reluctant to pay you with Zelle. This is especially true if they don’t already use the service and have only heard about it through stories about Zelle scams in the news.
Zelle recommends only sending payments to people you know and trust, so it’s best to have a secure, comfortable relationship with your customers before asking them to pay you with Zelle. It’s also a good idea to offer a variety of other payment methods instead of relying solely on Zelle to get paid.
Is Zelle The Right Choice For My Business?
Zelle can be very useful for businesses needing to navigate a new world of remote purchasing, selling, and banking. Because Zelle is readily accessible through a huge number of major participating banks and is free to use, it’s no wonder the app has made waves even amongst equally large and well-known competitors.
Zelle makes a lot of sense for businesses and users in the US who want lightning-fast payment transfers between US bank accounts. It’s also a great choice for small business owners who wish for an equally fast signup process that doesn’t require creating a new account number to start sending payments.
At the same time, the current proliferation of Zelle scams and the lack of any purchase protection guarantees could (understandably) make your customers uncomfortable with using it.
As long as Zelle continues to be free to use (in most cases), it’s a great option for any business looking to avoid the high cost of credit card processing and offer customers an easy, quick way to make a payment.
