Zelle, a money transfer app that is built on a bank-owned payments network to compete with PayPal, Venmo and Square Cash, will be released next year.
The app’s network connects 19 U.S. financial firms including the country’s biggest banks such as JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., and Citi. It will enable users to send money via their phones to recipients who will gain access to the funds immediately.
The announcement comes few days after cyber attacks, which occurred on the Internet through common devices like webcams and digital recorders, disrupted PayPal, Twitter, Spotify, some businesses hosted by Amazon Inc and other sites. They are all customers of an infrastructure company in New Hampshire called Dyn, which acts as a switchboard for internet traffic.
PayPal said it experienced some service disruptions due to the cyber attack which prevented some of its customers from being able to pay with PayPal in certain regions, though PayPal was not attacked directly.
The new Zelle person-to-person payment service is expected to rival Venmo, a payments app run by PayPal Holdings Inc. which has become popular with young adults making payments to one another for shared expenses, such as rent and lunch tabs.
The 19-bank consortium is known as Early Warning Services. Early Warning Services operates clearXchange, which earlier this year began connecting banks to allow individuals to send money by email and text message to people with accounts at other banks for their immediate use.
According to Bloomberg, Early Warning says Zelle will be available next year and expected to be accessible to more than 76 million mobile banking customers when it starts.
Banks that are part of clearXchange include Bank of America Corp, Capital One Financial Corp, JPMorgan Chase & Co, U.S. Bancorp and Wells Fargo & Co. Some of them have been experimenting with the Blockchain technology which underlies all Bitcoin digital currency transactions.