Alternatives to Zelle Recurring Payments

Chances are, you’ve heard of Zelle and have likely used it when splitting the check at dinner or sending money to a friend. It’s no surprise why it’s so popular, as it’s connected to almost every major U.S. bank.

Zelle had a record-smashing year in 2024, further proving the potential of its growing prevalence. The Zelle network reached 151 million enrolled users and powered $1 trillion in money transfers all across the United States. Transaction volume on Zelle boomed to a total of 3.6 billion, an impressive 25% increase compared to the prior year in 2023. 

It’s simple and noninvasive enough. As long as you have an account with one of Zelle’s many partner banks, you can access Zelle through your banking mobile app or online portal. 

But if you’re a business looking to offer convenient recurring payments for the gym, it gets a little more complex than it does for the bi-monthly bar tab. 

Does Zelle Support Recurring Payments?

Zelle does not support recurring payments natively within its app. If you want to use the Zelle app to pay for a recurring charge, you would need to manually initiate each transaction. Doing so is hardly convenient and can make it more difficult to make timely payments for monthly bills. 

However, many banks allow customers to set Zelle up as a payment method for recurring payments.

How to Set Up Recurring Zelle Payments

To make a recurring payment with Zelle, you must have an account with a participating bank. Most banks list their available payment methods and tools on their websites. For example:

Zelle Recurring Payments Wells Fargo

Zelle is primarily designed for sending funds between consumers rather than to businesses. 

To set up recurring Zelle payment with Wells Fargo, all a person needs is access to Wells Fargo Online or the Wells Fargo Mobile App. Customers automatically have access to Zelle services through these applications and can use them after entering their account credentials. Zelle can also be used via Wells Fargo to send payments to bank accounts outside of the Wells Fargo network. 

Recurring Zelle Payment Capital One

Capital One is another popular banking and credit provider that offers Zelle compatibility. 

Like Wells Fargo, Zelle is mainly used for account-to-account transfers between consumers, such as friends and family. Zelle can allow businesses to sidestep the fees associated with more traditional card payments, but also depends on the customer to have their own Zelle account set up and ready to use. 

Does Zelle Plan To Offer Recurring Payments?

Zelle does not currently offer native recurring or automatic payment features within its own app. 

However, several financial institutions have started offering Zelle recurring payment services.

Bank of America, for example, now allows customers to use Zelle to set up both one-time future-dated and recurring payment series. US Bank also allows scheduled payments via Zelle through its banking app.

Although more banks are adopting and embracing Zelle as a convenient means for moving money, Zelle remains a sometimes frustrating payment method for businesses in need of timely, accurate payments.

Fortunately, there are options available to you utilizing Open Banking and ACH protocols.

What is Zelle?

Zelle is a digital payment network allowing users to send and receive money from their bank account directly to another person or businesses bank account within the U.S. 

Zelle is so popular because they likely have a partnership with your bank or credit union account. Not only are they directly embedded in major U.S banks like Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo, but they also work with hundreds of smaller banks as well.

How Zelle Works

Using Zelle is relatively easy: people sign up using a mobile number or email through their bank's app, select a recipient, type an amount and send money. Typically transactions process within minutes if the recipient is also signed up. For businesses, Zelle allows their customers to send instant payments, allowing a frictionless flow of transactions for goods or services, with the funds automatically showing up in their account.

The Zelle payment flow is as follows:

1. Step 1: You must enroll your business in Zelle through your eligible business bank account. Any U.S. account holder, consumer or business, whose bank partners with Zelle can enroll. 
2. Step 2: The payee initiates the payments. This is where Zelle can become tricky for business use cases, as it relies on the other party to remember they need to send you a payment, or vice versa. The tradeoff, however, is that Zelle sends funds directly between accounts, helping your business to save more revenue on payment processing costs. ‍
3. Step 3: If you are sending money, you choose the amount to send. If you are receiving money, you can only receive the amount the other party decides to send you. This makes it incredibly important to only use Zelle for payments with trusted businesses and customers.

Zelle for Small Businesses

Although Zelle is most commonly used in peer-to-peer use cases, the platform does support small businesses with both B2C and B2B use cases. Any business whose bank is enrolled with Zelle and can access the payment method through their banking app. You can also accept payments from both other businesses and customers, as long as the other parties have access to a Zelle-enrolled bank. 

Recurring payments remain a feature at the discretion of the financial institutions. Zelle does not have any native features within its platform for setting up recurring payments. To find out if your bank supports automatic Zelle payments, check directly with your provider or view the official list of Zelle partners.

If you plan on using Zelle for larger B2B payments, you’ll need to check with your banking provider on how much money you can send and receive. Individual banks and credit unions set their own limits.

Benefits of Using Zelle

• Speed: Transfer of funds takes place within a few minutes.
• Convenience: Direct integration into banking apps means no other software is required.
• No Fees: There is no fee charged to send and receive money.

Drawbacks of Using Zelle

• No Cancelation: Once the money is sent, the amount sent to a registered user cannot be canceled.
• Irreversible payments: Mistaken transactions can only be reversed if the recipient agrees to do so.

Where Can You Use Zelle?

Zelle only works for bank account holders in the United States which makes sense because their partnerships and integrations are built around the structure of major banks and credit Unions of the United States.

Making Sense of Recurring Payments

Before examining alternatives it is necessary to have an understanding of how recurring payments allow for businesses and consumers to easily engage in regular transactions and in that way maintain a more predictable and consistent financial process. There are a couple of key nuances to recurring payments, notably understanding the difference between customer and merchant-initiated transactions, and understanding how these payments work with bank accounts.

What are Recurring Payments?

Recurring payments are automated payments that happen on a schedule, typically monthly for things like electricity bills or yearly renewals for a gym membership. Automating that payment ensures they always happen on-time and reduces administrative overhead in accounting for them. For instance, imagine that you're the owner of a gym, and you have 1000 gym members who pay $50 a month. That would be a flat $50k a month in revenue, but billing everyone every month in a non-automated way would take considerable time. Not to mention, this would be too many missed payments and administrative time. If you set up recurring payments to collect $50,000 every month from your members, what it would do for you is make your revenue look a lot more steady.

What is a Customer Initiated Transaction (CIT)?

A Customer Initiated Transaction is one in which the customer sets up the recurring payment, likely at the beginning of a service agreement or subscription. For instance, when a customer subscribes to a streaming service, they enter their payment information and authorize a charge for a certain amount at monthly intervals.

What is a Merchant Initiated Transaction (MIT)?

In a Merchant Initiated Transaction, the merchant charges a pre-authorized payment method on a recurring schedule. This is usually used with services requiring periodic payments, like utility companies or a gym membership, where the merchant processes the transaction without direct input from the customer monthly.

How do recurring payments work with bank accounts?

Recurring payments will generally make use of ACH (Automated Clearing House) when they're going out from a bank account. The customer hands over their banking information, and the merchant sets up automatic withdrawals in the amount and according to the schedule the customer agrees to. This makes paying bills easy for the customer and secures cash flow for businesses.

Best Zelle Alternatives for Recurring Payments

There are plenty of other services providing this type of recurring payment functionality for businesses out there. Here are some of the most obvious options:

• PayPal: Best for businesses whose customers come from all around the world. Accepts payments in multiple currencies and uses a service most customers aren't afraid to use. For instance, an online magazine with subscribers from all over the world can use PayPal for easy subscription management.
• Stripe: Offers full-featured tools suited for recurring billing that allows e-commerce businesses a lot of tools within their suite. They follow an API-first principle, making whatever they offer highly customizable to fit businesses whose needs may not get fully supported through an out-of-the-box solution. This makes it a perfect fit for SaaS businesses in need of a flawless mix between their websites and apps. Using Stripe, the monthly software subscriptions for a tech startup are handled efficiently.
• Square: Square's features for easy recurring billing and invoicing work for small businesses and freelancers that need a way to get paid. Its UI is user-friendly, and its tools are simple, so it remains accessible, no matter how much back-end dev knowledge you have. A freelance graphic designer can use Square to set up recurring payments for their client projects.
• Adyen: The solution is flexible and can be adapted to any business: both growing and large-scale companies that need to process recurring payments. This service supports over 250 payment methods, from the widest used credit cards to something more exotic, like different kinds of e-wallets, providing a good chance to maximize your recurring revenue. A fitness app accessible through a subscription could use Adyen to accept payment methods from all over the world that their user base would have preferred.
• Braintree: Ideal for a company that would like a wide range of options to facilitate one-time and recurring payments. They accept a wide variety of payment methods, including credit cards, PayPal, Venmo, and digital wallets. So, it is quite versatile to suit different types of transactions. An online merchant could use Braintree to easily manage everything from simple sales to complex subscriptions, ensuring a seamless process for customers.

Benefits Of Accepting Direct Bank Payments Instead of Credit Cards

Accepting bank account payments instead of or in addition to credit cards for online card not present transactions can be beneficial:

• Lower Fees: Direct bank account transfers usually cost less than fees on the credit card. A few go as high as 3.5%. Avoiding those would have a direct effect on your bottom line.
• Instant Access: Money sent directly to your bank account is available for use right away.
• Incentive Flexibility: Lower processing fees for bank account transfers imply that you will be in a position to offer more discounts and incentives for customers who pay directly.

How Spreedly Can Help Enable Recurring Payments

Offering Zelle can be essential to attracting more younger and more tech-savvy customers in the up-and-coming generations. Across the board, all generations are showing a preference for sending money digitally. One Zelle study shows that 93% of Gen Z and Millennials use online or mobile apps to send and receive money, along with 91% of Gen X and 82% of Baby Boomers. 

While Zelle does not offer any features for you to set up and support Recurring Payments, a platform like Spreedly can help you bridge such gaps by connecting your business with a number of gateways that accept multiple payment methods and are, therefore, suitable for recurring transactions. 

Spreedly’s Connect solution gives you a central location for connecting, viewing, and managing your payment stack — including recurring payments. Our open payments platform lets you plug into as many tools, payment methods, and providers as you need to diversify your payments and reach more customers. 

Zelle is terrific for instant, fee-free transactions, but it creates a void for users who really need to send and receive funds on a more consistent basis. Layering in platforms like PayPal, Stripe, and Square on top of your payment stack, with Spreedly's payments orchestration layer, can provide the functionality needed for a real proper financial management system.

Spreedly gives you the operational flexibility and freedom to accept transactions through a variety of different payment gateways and platforms, all while keeping your data centralized in one place. You can offer customers the specific payment methods they want without having to manually manage a million different providers and application connections. 

Plus, you can increase your transaction authorization rates while simultaneously keeping card data safe in Spreedly’s advanced vault.

Reach out to Spreedly to learn more about setting up recurring payments for your business, and opening up your payments stack today.

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