Using Zelle for Business: The Small Business Guide
- Zelle is a peer-to-peer (P2P) digital payment network that transfers money between bank accounts almost immediately.
- Using Zelle for Small Business Payments is a fast and free way to send and receive money.
- Many banks integrate with the Zelle interface to make it easier to send money between bank accounts to pay for goods and services.
- Find out how Zelle works and why it might be right for your small business in this article from the experts at Nav.
How does Zelle work?
As a peer-to-peer (P2P) digital payment service, Zelle uses the Automated Clearing House (ACH) system to transfer money from one bank account to another. Although it can take up to three business days to initiate an ACH transfer from your bank account, a Zelle transaction can transfer money between bank accounts in just minutes.
You can think of it as a digital check, where the routing information, signature, and other details are handled by Zelle to ensure the transaction is secure and fast. Unlike PayPal or other digital payment services, Zelle does not allow you to accept credit card payments. However, you can configure your Zelle account to work with your debit card.
Zelle integrates directly with over 10,000 US banks and credit unions, including Chase, Wells Fargo, and Bank of America, so you can easily send and receive payments. To send money with Zelle, you can send directly from your financial institution through the bank’s mobile app or through the Zelle app. Either way, the money is deposited almost immediately into the recipient’s deposit account.
To send a payment from the Zelle app, the payer only needs the recipient’s email address or phone number. You must, however, ensure that the money you are going to send is in your account, as the payment goes through directly and there is no way to reverse a payment.
Why would a business use Zelle?
The main reason to use Zelle for small businesses is that payments are immediate. You can request payment from a customer or vendor and the money will be in your business bank account within minutes.
Another reason to use Zelle is that it’s a convenient payment option for your business customers. Accepting contactless payments through Zelle can give you a leg up on your competition when it comes to facilitating collaboration. All your customers need is your mobile number or email address and they can pay you instantly from their mobile banking app or Zelle account.
As a business owner, receiving payments quickly helps you free up cash flow and gives you leeway in your day-to-day operations. Plus, every time you can reduce the number of paper checks or cash you deal with, you help reduce one more headache in your business operations.
Zelle is also completely free and allows you to request money and get paid immediately, even between completely different banks.
How to Use Zelle for Business
If you have a business current account with a bank that uses Zelle, you will need to register with the bank’s mobile app or online banking service. Once registered, payments sent through Zelle will be automatically deposited into your account.
If your bank does not work with Zelle, you will need to download the Zelle app and open an account with them. You’ll need to connect your bank account manually, and your first payment may take up to three business days to be transferred to your account, but after that it should be immediate.
Once you are registered with Zelle, you can request Zelle payments from customers. To make payment requests, using the Zelle app or your mobile banking app, click on “Send Money” and toggle on “Request Money”. Next, select the account holder you are requesting money from or click “add recipient” using the customer’s email address or phone number. Enter the amount they owe you, review the transaction, then press “ask”. You can also enter an optional note to help remind them what you are requesting payment for or for your own categorization system.
You can also give the customer your work phone number or email address associated with your Zelle business account, the amount of money they owe you, and ask them to send it from their mobile device.
Advantages and Disadvantages of Using Zelle for Business
As with any payment method, Zelle has its pros and cons.
- Completely free for customers and businesses.
- Contactless payment method.
- Fast transfers between banks.
- Get cash almost immediately.
- Convenient way to allow customers to pay for goods and services or pay sub-contractors.
- The app is available on Apple and Android devices.
- Not available outside the US and you must have a US mobile number.
- There is no purchase protection for customers or business owners.
- There are transaction limits that differ from bank to bank, so it’s not necessarily a great way to make payments for large businesses.
- If your bank doesn’t integrate with Zelle, your money transfer transactions are limited to $500 per week.
Which banks offer Zelle for business accounts
Zelle says more than 10,000 US banks and credit unions offer the payment service. Some popular banks that integrate Zelle include:
- Bank of America
- Capital one
- Citi Bank
- JPMorgan Chase
- Morgan Stanley
- NCP Bank
- Wells Fargo
It’s important to read the disclosures to determine the limits Zelle has with your bank, including the number of transactions or the amount of money you can transfer within a certain time frame.
You can find out if your bank offers Zelle for business accounts here.
Alternatives to Zelle
Zelle might not be the right payment solution for every small business, especially if you’re going to be doing a large volume of transactions or want to provide payment protection to your customers. Some alternatives to Zelle include:
- Pay Apple
- Amazon payment
- Google Pay
Each of these will have their own advantages and disadvantages, but finding the right payment processing solution for your small business is important.
How do I record Zelle transactions?
Although Zelle transactions are recorded in your bank account, transfers will not be automatically recorded in your accounts. If you use accounting software like Quickbooks, you will need to manually record transactions made with Zelle. This is where the “optional note” feature can come in handy. You can view all your Zelle transactions in the Zelle app.
Are business transactions secure with Zelle?
Yes, using Zelle transfer is safe and secure. However, there is no payment protection as there is no way to reverse a transaction. If a customer wants a refund or sends you the wrong amount of money, you’ll need to initiate another transaction to either refund them or send or request the difference. There is also no way to formally challenge a transaction.
Do I need Zelle contractors?
Zelle can be a great way to pay contractors who work for your small business. They will be happy to receive their payments quickly and without having to worry about cashing a check. However, you will need to ensure that your small business account contains all funds before sending payment, as there is no way to reverse a transaction and the money is transferred immediately.
Is Zelle free to use for small businesses?
Yes, Zelle is free for small businesses and personal accounts.
Are there any restrictions on using Zelle?
Yes, Zelle has different transaction limits with each bank. Read your bank’s statements with Zelle to determine what those limits are. If your bank does not integrate directly with Zelle, you are limited to transferring $500 per week.
Are there any tax implications with using Zelle?
Unlike Venmo or PayPal, Zelle does not report your transactions to the IRS. This means that you will have to declare this information yourself.
Final Verdict: Using Zelle for Small Businesses
If you don’t have a large number of transactions or high sales volume, Zelle can be a convenient payment option for your customers, suppliers, and contractors. Quickly pouring money into your business bank account using Zelle can help you free up cash and keep track of your payments. The convenience of offering the Zelle network for payments can also give you a competitive edge over your competitors.
If you’re looking for financing like small business loans or business credit cards, Nav can help you sort through the best option for your business. Register for a free account today and see your options.
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