Zelle P2P payments are a great way to send money quickly and easily. Unfortunately, they’re also risky because the same rules do not protect the transaction as a credit card or PayPal payment. This guide will help you understand why Zelle isn’t as safe as you might think and what to do about it.
What is Zelle?
Zelle is a service that allows you to send and receive money from friends, family, and co-workers. It is a fast, simple, and secure way to send money to anyone in the U.S.
Zelle is used by almost all major U.S. banks, including Bank of America, Chase, Wells Fargo, and Citibank. You can also use Zelle through PayPal or Venmo if you want an extra layer of protection on top of what your bank offers with their P2P payment methods (more on that later).
The most significant benefit to using Zelle over other P2P services like Square Cash (which has recently partnered with Chase) or PayPal’s Venmo is that it’s free: $0 fees per transaction regardless of the amount sent or received. There are no fees associated with sending money either because every bank uses its own funds when transferring payments, not yours.
The biggest downside to using Zelle is that it’s only available in the U.S., so if you’re an international user looking for a similar service or live outside of the U.S., this isn’t your best option.
Who uses Zelle for person to person payments?
Zelle is used by almost every major bank in the U.S., including Bank of America, Chase, Wells Farg,o and others. This makes it an appealing option for those who have accounts with one of these banks because they can send money to other Zelle users and send money to friends or family members who have accounts at another bank.
Some of the reasons people use Zelle include the following:
- You’re a family member or friend of the person you’re paying. For example, you might use Zelle to send money to your mom when she’s in between paychecks.
- You know and trust the business or person you’re paying. Zelle is often used by companies who want to make it easy for customers to pay them back for services rendered or merchandise purchased online (and what better way than through their preferred bank?).
- You want to pay someone quickly and easily, but you don’t want to share your credit or debit card information. For example, if you’re buying something from Craigslist or another online marketplace and need to pay the seller directly. You’re sending money internationally.
What are the risks associated with Zelle?
Zelle is popular because it allows you to send and receive money instantly—no matter where you are or what time of day it is. But when it comes to security, Zelle isn’t all that different than traditional bank transfers. If you’re worried about fraud, here’s what else you should know:
Risk 1: Identity theft
Just like with other P2P payment methods such as PayPal or Venmo, criminals can use your information to commit identity theft if they have access to your account number or bank account information (which includes routing numbers). Make sure that only people who need this info actually get it by keeping all sensitive data on paper rather than in digital files. And make sure those files are locked away safely in a secure location.
Risk 2: Hackers
Your computer could be infected with malware if you click on one of the many phishing scams out there pretending to be from Zelle or another financial institution asking for more personal information than necessary (like social security numbers). It’s also possible for hackers who manage to get into a company’s databases through attacks like phishing scams could steal logins and passwords from customers’ accounts between banks—and then use them directly or sell them on dark web marketplaces where criminals buy stolen data so they can impersonate their victims online to commit identity theft.
Risk 3: Your Bank Dealing with a fraudulent transaction can be difficult
This is especially true if it happens on your bank’s end before you even know it’s happened. While you may be able to dispute a fraudulent transaction with your bank, they’ll still likely charge you for any associated fees—and it could take days or weeks for the money to be returned to your account.
- For example, if someone uses stolen information to set up a new Zelle account and then uses that account to send money directly into yours, your bank may not be able to stop it.
The reason is that the money has already changed hands and is no longer in the control of your bank when you report the fraud. You’ll have to work directly with the person or business who sent it to you (usually by contacting their bank), which can be a time-consuming process.
What You Can Do About It
Keep your computer updated with the latest versions of all apps, software and operating systems in order to protect yourself from known vulnerabilities. Also, make sure you’re using a strong password that’s unique for each account you have—that means don’t use the same one for everything! If a site or app doesn’t require one, create an easy-to-remember passcode instead.
What to do after Zelle risk assessment
If you have a risky account, monitor it closely. Check your bank statements regularly and report any suspicious activity immediately. Sign up for alerts so you can be notified whenever something happens with your account, like if there’s a change to the address or phone number on file. Share this article with friends and family so they are aware of the potential risks of using Zelle.
If you’ve been victimized by fraud, stop payments from being sent from that account—which means contacting both the bank where your money was stolen from and Zelle—and report it to both law enforcement agencies as well as the Federal Trade Commission (FTC). You should also create a fraud alert on your credit report so lenders know they should verify identities before giving out loans in your name.
If you have a Zelle account, take steps to protect it. Monitor your bank accounts and credit reports regularly for any suspicious activity.
We hope that this post has been helpful in answering some of your questions about Zelle P2P payments. A lot of people have been asking us about the risks associated with using Zelle, and we’re happy to share our findings with them! As always, we love hearing from you and learning more about how our readers use technology. Please leave any questions or comments in the space below.