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Venezuelans are digitally dollarizing using Zelle, a U.S.-based payments network that allows anyone with a U.S. bank account to instantly transfer funds to another U.S. bank account for free. Although Zelle is meant for U.S. usage only, Venezuelans have repurposed the network as a way to make dollar payments among each other. Large Venezuelan supermarket chains have enabled Zelle as a form of payment, and cafes, restaurants and taxis accept it. But business and commercial use infringes on Zelle's terms of service, which specifies that its network is intended only for personal use. Wells Fargo has notified many Venezeulan account holders their connection to Zelle will be terminated, so the game may soon be over.

Early Warning Services, LLC. (EWS), the owner and operator of the Zelle Network, and The Clearing House (TCH), the operator of the RTP network, today announced that financial institutions (FIs) can now settle Zelle payments over the RTP network, the real-time payment system in the United States. PNC Bank and U.S. Bank have successfully completed a pilot of the integration, transmitting money using Zelle over the RTP network. Additional FIs will integrate the two networks and start testing later this year.

US banks are reportedly exploring ways to get consumers to trust the fast payments system Zelle, which is jointly owned by several financial institutions, by standardizing the refund procedure. They are discussing a "playbook" on how to refund customers and each other for illegitimate transfers. While Zelle operator Early Warning Services maintains fraud and scam claims make-up less than 0.1% of payments, scammers often use Zelle to trick users into sending them money "under the guise of customer support." Banks are required to refund customers for transactions they didn't authorize, but there is no such protection for customers who are duped into sending money.

Zelle's payment volumes and values increased 58% (to 1.2 billion transactions) and 62% ($307 billion sent) and 457 new financial institutions joined its Network in 2020, bringing the total number to nearly 7,000. Most consumers experience Zelle through the mobile banking apps of their banks and credit unions, rather than Zelle mobile app. Also, according to Zelle research, more than 85% of consumers either use or plan to use P2P services.

According to a report by from the office of U.S. Senator Elizabeth Warren, fraud and scams are a growing problem on peer-to-peer (P2P) payment service Zelle, and the banks that run the platform are not refunding the vast majority of defrauded consumers, breaking their promises to their customers and potentially violating federal law. A response by the industry acknowledged that Zelle,  like every instant P2P payment service, is not entirely free from those who seek to defraud users, but expanding the bank liability framework would have adverse impacts on consumers choice, the cost of the service, and on small financial institutions for whom the costs related to the potential for unlimited liability would be too onerous.

"Venezuelan customers say that making their payments for Zelle in dollars is "easy and fast" in a context of economic crisis and current service failures."

"Zelle's immediacy has also made it a favorite of fraudsters. Other types of bank transfers or transactions involving payment cards typically take at least a day to clear. But once crooks scare or trick victims into handing over money via Zelle, they can siphon away thousands of dollars in seconds. There's no way for customers - and in many cases, the banks themselves - to retrieve the money."

For the 2019 calendar year, the Zelle Network processed $187 billion in payments on 743 million transactions. Year-over-year payment values increased by 57%, while transaction volume increased by 72%.

These days, by far the fastest and most efficient way of delivering money is via smartphones and mobile devices. The U.S. government should simply provide a general portal to a wide range of payment delivery mechanisms. Visa and Mastercard are easily capable of handling these payments, especially as their normal transaction volumes have fallen significantly due to the shutdown. But the government should also work with platforms such as Venmo, Zelle, Square Cash, Paypal, Apple Pay and Google Pay [Chime, a San Francisco fintech startup, says it's piloted a way to distribute the $1200]. And it could also offer payment in cryptocurrency as an option.

Many PNC clients are having trouble connecting their bank accounts to their Venmo apps, cutting off their access to the popular mobile-payment system, owned by PayPal. When they have sought help, they have found the two companies blaming each other for the disruption. PNC suggested in tweets that customers switch to Zelle, a payment app that it and other big banks operate jointly and that competes with Venmo.

As more people and places say 'No' to cash, apps like Venmo and Zelle are emerging as the new dominant payment methods in the United States.

"The diffuse nature of U.S. banking (and the concentrated nature of Canadian banking) will play into the upcoming launches of FedNow and Real-Time Rail (RTR), two instant retail payments system belonging to the Federal Reserve and Bank of Canada, respectively. I'd expect RTR usage to amp up quickly, given that Canada's big-5 banks will likely help sponsor it. FedNow adoption will lag. It's just not that easy to get 9,466 institutions on the same page."

Making Payments Faster and Modernizing the Payment System: While perhaps relevant in some countries, this rationale looks increasingly inapt in the United States, where a real-time payment system grows in use, consumers happily pay each other with Zelle or Venmo, and PayPal and Square thrive. Thus, Federal Reserve Governor Waller has observed, "What problem would a CBDC solve? Alternatively, what market failure or inefficiency demands this specific intervention? After careful consideration, I am not convinced as of yet that a CBDC would solve any existing problem that is not being addressed more promptly and efficiently by other initiatives."

FIS published its 2023 Global Payments Report that examines how consumers pay today both in-store and online across 40 global markets. In 2022, there were almost 70 real-time payment (RTP) schemes providing high-speed payment rails that helped drive account-to-account (A2A) payments to account for $525 billion in global e-commerce transaction value, versus $463 billion in 2021. A2A payments flow directly - and often instantly - from a consumer's bank account to a merchant's account, helping to drive down the cost of acceptance for merchants. The growth of A2A in the U.S. mirrors the global trend, with A2A accounting for 9% of e-commerce transaction value in 2022. This is projected to keep growing, fueled in part by consumer use cases arising from the 2023 launch of the Federal Reserve's FedNow payments network, and the existing RTP from The Clearing House and Zelle real-time payment networks

PayPal said consumers flocked to its service in the final months of the year as they hurried to finish their holiday shopping and started using the company's wallets to buy and sell cryptocurrency. The firm added a record 72.7 million active accounts in 2020, with the addition of 16 million accounts in the fourth quarter alone. Venmo, PayPal's P2P service, processed $47 billion in payments, up 60% from a year earlier.