Why Some Banks & Credit Unions Are Saying "No Thanks" to Zelle
March 2025
Starting April 1, 2025, Zelle will stop supporting its standalone app. If you want to send or receive money through Zelle, you’ll need to do it directly through your bank or credit union’s mobile app or online banking platform. Zelle says this change makes sense because most financial institutions already support their service, so the separate app isn’t really needed anymore. However, this shift raises a big question: what does this mean for the people using Zelle—and for the banks and credit unions that are expected to handle the service?
What This Means for Users and Banks
By making users rely solely on their bank’s apps, Zelle has essentially handed over all responsibility when it comes to liability for fraud and scams. And not every financial institution is thrilled about it.
Why Some Financial Institutions Are Opting Out
At Prestige Credit Union, we work hard to secure your personal info. Here’s how we help protect you:
Zelle is convenient—there’s no denying that. Nevertheless, not every bank or credit union wants to be part of the Zelle network, including Prestige Community Credit Union. Why? Mostly because of concerns about fraud, liability, and a lack of control over the platform.
Here are the main reasons some financial institutions, like Prestige, are deciding Zelle just isn’t worth the risk.
1. Fraud Is a Big Problem
Zelle has a reputation for being a breeding ground for scams and fraud. Because payments are instant and can’t be reversed, it’s almost impossible to recover money once it’s been sent. That’s great for convenience, but not so great if you’re tricked into sending money to the wrong person.
The most common Zelle scams involve phishing (like fake emails), impersonation (someone pretending to be your friend or a company), or fake invoices and donation requests.
The problem is so severe that in December 2024, the Consumer Financial Protection Bureau (CFPB) sued Zelle’s operator and three major banks—Bank of America, Chase, and Wells Fargo—for failing to protect customers. According to the lawsuit, customers of these banks have lost over $870 million to scams since the Zelle platform launched seven years ago.
2. Who’s Responsible for Fraud? (Hint: Not Zelle)
Here’s where things get tricky. If someone hacks into your account and sends a Zelle payment, your bank is usually required to reimburse you. But if you were tricked into sending the money yourself (like falling for a scam), it’s considered an “authorized transaction.” In that case, Zelle says it’s not their problem—and often, neither is it your bank’s or credit union’s.
This leaves financial institutions in a tough spot. Even if they’re not technically required to cover losses from scams, they still must deal with angry customers. For smaller banks and credit unions, these losses can be devastating.
3. Lack of Control
Zelle is owned by Early Warning Services, which is a group of big banks. Smaller financial institutions that join Zelle don’t have much say in how the platform operates or what protections are in place for their customers.
For a lot of smaller banks and credit unions, this lack of control is a dealbreaker. They don’t want to be stuck cleaning up messes caused by policies they didn’t help create.
So, What’s Next?
Zelle’s decision to move entirely to financial institutions’ apps makes sense from a convenience standpoint, but it’s created some real headaches for the banks and credit unions expected to handle the risks.
For members, this shift means being extra careful when using Zelle. Double-check who you’re sending money to, and don’t fall for anything that seems even slightly suspicious.
If you are a Prestige member that currently uses the Zelle App for sending and receiving funds, starting April 1, 2025, those transfers will no longer work. You will have to temporarily use another third-party App for requesting funds. We are working on a solution that will have the ability to request money using the Real Time Networks in the coming months.
What is our Solution?
Prestige Community Credit Union offers a P2P alternative to Zelle for sending money. Pay-A-Person is a safe & secure way to send money from your Prestige account. It is built into our Online Banking and Mobile App under the “Payments” tab for your convenience, and it doesn’t require the person you are sending money to have an App or be affiliated with a financial institution that offers the service as well. It also offers two safeguards that other P2P providers do not. It requires Multi Factor Authorization when setting up a payee, to ensure you are the one sending the money verifying you have not been hacked. It also sends a challenge question to the receiver to ensure that it goes to the right person. If they do not have the answer to that question, they don’t receive the transfer. These safeguards protect our members from unintended losses.
We are currently working on updating our P2P solution to be able to request funds from outside the credit union as we know that some people like the convenience of requesting funds from other individuals. This solution should be implemented in the coming months.
Remember these important tips for any P2P payment service:
Only send money to people you trust.
Always verify recipient information before sending.
Be cautious of unexpected payment requests or offers.
For financial institutions, deciding whether to partner with Zelle is a balancing act: offering customers a popular service versus taking on the risks that come with it.
At Prestige Community Credit Union, your security and financial wellbeing is our top priority. If you have questions about secure payment options or need assistance, don’t hesitate to reach out to us. Thank you for being a valued member of Prestige Community Credit Union.