Zelle, supported by almost all the major banks in the US, is our favourite for domestic transfers, right? I use it frequently to send money from Zelle to Venmo or Zelle to Cash App when I have to share funds with my friends or family but just recently I came across a query only is Zelle an ACH transfer? Let’s see if I can help you figure out the answer to that!
Do Zelle Payments Process As ACH Transfers?
You must have come across the terms “ACH payments” before especially as these are increasing in popularity for both, business to business and person to person transactions.
It is a cost-efficient and user-friendly payment processing network used by many banks, credit unions and money transfer apps.
Zelle does use Automated Clearing House (ACH) payment system to process the transactions between the platform and US bank accounts. However, it is different in operation in regards that Zelle payments complete within a couple of minutes where as typical ACH transfer from one to another bank account can take up to three days.
What Is Automated Clearing House (ACH) Transfer?
ACH transfers are managed by Automated Clearing House network to perform money transfers between different banks.
This form of transfer is used to send money electronically from person to person, making bill payments, making direct deposits, and sending funds externally, etc. Other examples include:
- Recurring deposits
- Taxable brokerage account deposits
- Getting government benefits
There are two types of ACH transfers. Below is a quick summary of how these work.
| ACH Debit Transactions | ACH Credit Transactions |
| Money is pulled from the account, such as in case of bill payments. | Money is pushed to other account online, such as to other bank accounts, friends accounts, etc. |
What Are Fees and Limits For ACH Transfers?
We should begin with a piece of good news: ACH transfers are typically free!
This holds true for payroll direct deposits and bill payments but, in some cases, expedited bill payments may be charged. There are also fees for ACH credit transfers but these are mostly limited to $3 and nothing more than that.
There are some ACH-based payment platforms that charge a fee for peer-to-peer money transfers but that generally depends on which app you are using.
When you look at how long ACH payments take to process, you will se a lot of variation here as well. Typical ACH transfers can take up to several days. They are also restricted to business days only as a network operator has to process these and banks close on weekends and holidays. There can also be unexpected delays in the payment processing.
Are There Any Restrictions On ACH Transfers?
ACH transfers are typically not used for sending money internationally but that does not make them any more free of restrictions and limitations. Some of the things you have to consider with Zelle ACH transfers are:
- Transfer Limits: There is a cap on how much you can send from your account in a day or a week.
- Penalty Fees: Banks often charge a fee when you begin transaction with insufficient funds and then cancel the transfer.
- International transfers: ACH transfers do not support international transactions. You can only send and receive money within US.
- Cutoff Hours: ACH transfers are not available all around the clock. They operation in certain time frame and are paused for next business day when the time per day complete.
You must check out bank policy along with ACH policies to confirm how the transfer would work in your case. Sometimes the fees, transfer time, and limit varies as per bank’s money transfer protocols.
Why Are ACH Transfers Preferred?
With a handful of restrictions mentioned above, you must be wondering why banks and financial institutions tend to use this mode of payment processing.
ACH transfers are not without its sheer share of benefits. It is convenient, easy to integrate with banking services, takes less time to process, and is cost-effective as well.
- ACH transfer are initiated right after you press the send button. Delay only occurs because of certain operating rules or weekends/holidays.
- They are more user-friendly than writing a check or making debit card/credit card transfers.
- ACH transfers are also free although there may be minimal charges but only if your bank applies them.
- In any case, they are less costly than wire transfers which charge up $25-$75 for sending money internationally
Other Banks That Support ACH Payment Option
ACH payment processing is a growing trend. Given that it is super easy to integrate with the banking services, increasing number of financial institutes are not paying attention to ACH transfers.
It wouldn’t be possible to list down all the banks in the US that support ACH payment option but here are top 30 names that you should check out:
- Capital One
- Bank of America
- Chase
- BBVA Compass
- Bluebird By American Express
- Citi
- Wells Fargo
- Union Bank
- TD Bank
- Bank of Internet USA
- Empower Federal Credit Union
- Horizons Credit Union
- Citizens Banks
- Citizes Equity First Credit Union
- Huntington Bank
- North Island Credit Union
- Credit Union One
- Fidelity
- GoBank
- Gulf Winds Federal Credit Union
- Kitsap Credit Union
- Lake Trust Credit Union
- Kinetic Credit Union
- Michigan First Credit Union
- One United Bank
- Randolph Brooks Federal Credit Union
- SunTrust
- USAA
- US Bank
- The Washington Trust Company
How Does Zelle App Work?
Zelle is a competitive peer-to-peer payment app that works similar, in some way, to PayPal, Cash App and Venmo. It basically provides users with ease of sharing funds quickly to other accounts and managing small business payments without any additional charges.
Zelle transactions do not take longer than a couple of minutes. The money transfer is secured through PIN and data encryption.
You can set up Zelle account right now, either by getting help from your financial institution or downloading the Zelle mobile app. Zelle payment app was launched by the collaboration of almost all the majority banks and credit unions in the US and, therefore, all of them can guide you on how to enroll your account in Zelle.
You don’t necessarily need a bank to work with Zelle. You can download the app anyway and provide your username and password to create account.
How To Send Money With Zelle ACH Transfer?
It is a sweet piece of cake to send money to anyone over Zelle once you have successfully set up your account. The steps you need to take are:
- Decide who you want to send money.
- Enter the recipient’s account information including email ID or phone number.
- Then enter the amount of money that you want to send.
- Click on the Send button to initiate the payment.
Sounds pretty straightforward, right? There are a few things that you must watch out for so hold your excitement a bit longer!
First of all, I will strongly discourage using Zelle to receive or send payments to account that you don’t personally know or trust.
here is little that this app can do to refund the money if you accidently send it to wrong recipient or a scammer. Other than that, Zelle also does not present the option to cancel a payment.
Your only hope is that recipient does not have a Zelle account. The money would sit in the process and eventually, sent back to your bank account. You can choose to Cancel the Payment in this scenario as well. Simply open Account Activity page and click on Cancel This Payment.
What if you are on the other end of the transaction? For the recipients of Zelle transfers, it is convenient to have a Zelle account so the payment will go directly into the linked bank account without delay.
It is also the case the non-Zelle recipients are encouraged to first sign-up with the service even if they choose to not link a bank account. They can access the funds in this manner as well although the transfer would take up to 3 days.
Which Banks Support Zelle Payments?
It is beyond the scope of this blog to cover all the banks that support Zelle but currently, more than 10,000 banks and credit unions work with Zelle payment platforms. New names are also expected to be added in coming years.
This is because the banks itself came together to launch this app. Zelle is owned by Early Warning Services, LLC but it wouldn’t have been possible without the efforts of US largest banks like Wells Fargo, Capital One, PNC Bank, Chase, etc.
What Are Zelle Transfer Fees and Limits?
Zelle transfer limits vary depending on the bank that you are using. Below are the figures for some of the most prominent names that you may want to check out.
| Bank/Credit Union | Daily Transfer Limit |
| Wells Fargo | Up to $35,000 |
| Chase | Up to $20,000 |
| Bank of America | $3,500 |
There is a lot of variation in the daily transfer limit that Zelle provide to the users keeping in view different factors like account type and account history. For example, Chase private clients can enjoy higher daily transfer amount and Wells Fargo generally lowers the transfer cap for its new users.
Is Zelle Safe To Use For Money Transfers?
Customers who are using Zelle for small business payments or daily transactions with friends and family got nothing to worry about.
Zelle knows how to keep your money safe through data encryption, authentication procedures, and monitoring features.
The trouble strikes if you begin to use this platform for large purchases, sending money to retailers you don’t personally know or making transfers of huge funds to unknown personal accounts.
Zelle is fast and convenient to use but it was never designed to be a replacement of a credit card, debit card or a bank account. Such services protect users from fraudulent transactions. They also have protocols to refund an amount if scam is detected. Zelle does not offer any such buyer’s protection and it has not made false promises to get your money back if scammed.
How ACH Differs From Wire Transfer?
As you dig deeper into payment processing network and more, you will observe that ACH is often to wire transfers for sending money from one account to another.
This is because these are the most prominent types of electronic money transfers that are used extensively by peer to peer payment services and banks/unions in the USA.
| ACH Transfer | Wire Transfer | |
| Transfer Limits | Limits apply depending on transfer protocols set by the banks | Limits apply depending on transfer protocols set by the banks/service. |
| Transfer Fees | It charges 1% of the transaction amount as fee. The recipient does not need to pay any fee. | These are costlier than ACH. Charge up to $100 depending on bank and location. There may also be additional fees that the recipient has to pay to get the funds. |
| Transfer Time | Take up to three days for the money to travel from sender to recipient. The funds will appear in the recipient account as soon as they are received | The transfers are processed on the same day. The funds will appear in the recipient account as soon as they are received |
| Payment Options | Direct payments from bank accounts | Wire transfers can take place between bank account, debit cards, credit cards, P2P apps |
| Security | NACHA security system | CFPB for fraud and consumer protection. |
| Threats | There are generally no threats for ACH transfers thanks to NACHA network that is a very secure option for sending money | Wire transfers do not operate with a highly secure system. Therefore, senders are often at the risk of losing money. Wire transfers are also impossible to reverse so there is nothing you can do about the money that you end up sending to a wrong account. |
| Reach of Operation | ACH transfers are meant to send money locally. Global ACH transfers are available but their operation relies completely on banking network. | Wire transfers are frequently used for cross-border payments. |
| Reversals | You can request a reversal in case of an error. | You can not get a reversal |
Before You Go!
Zelle is an ACH transfer that has made money transfers free, quick and accessible to everyone.
New Zelle users have limited knowledge of how this platform works. If you are also one of them, you may not want to leave without reading does Zelle report to IRS or not. Moreover, if wire and international transfers have got your attention, check out does Venmo works internationally or not. Just a few minutes read!
Miriam Caldwell is a dedicated & expert freelance writer to educate people about personal finance management and budgeting. She shared her knowledge and published the articles at TheBalance.com, GOBankingRates, and BlissfullyDomestic.com. Many financial institutes pick Caldwell as the brilliant source for educational personal finance content.
