Zelle’s Community Bank Blitz Poses Growing Threat to Credit Card Issuers

Digital payments network Zelle added 178 new financial institutions to its partner list during Q4 2024 and Q1 2025, the company recently announced in a press release. Zelle’s growth could position the company to gain transactions, and revenue, from credit card issuers.

And make no mistake about it, Zelle is growing rapidly. The company more than doubled the financial institutions it took on over the same period one year prior. Zelle now has a network of more than 2,300 financial institutions, and 95% of them are either community banks or credit unions.

For those who prefer to see transactional data as evidence of growth, consider that users sent more than $1 trillion through the tool in 2024. That figure represents a 27% increase over dollars sent across the Zelle network in 2023. 

Zelle operates a platform that people can use to make payments to others who participate on the company’s network. 

Credit card issuers may not be bothered that people use Zelle to send peer-to-peer payments. But small businesses are also members of Zelle’s network. 

And when a user makes a payment to a small business with Zelle, they’re doing more than just keeping their credit cards in their wallets. They’re preventing issuers from collecting the income they would have gained from the transaction if the payor had used a credit card instead.

Small business fueled Zelle’s growth last year. The American Banker reported that small businesses either sent or received 500 million Zelle transactions totalling $283 billion in 2024. Both figures represent a 32% increase over prior-year numbers.

Zelle has more than 150 million enrolled users, and approximately 23 million of them used the tool to make a payment to a small business during Q4 2024.

Part of the appeal of Zelle is the speed with which payments travel from a payor to a recipient. According to the company’s website, “money sent with Zelle is typically available to an enrolled recipient within minutes.”

But one of the company’s greatest strengths could also prove to be its Achilles’ heel.

Credit cards bring numerous benefits to cardholders, including the security they offer in the event of payment fraud. 

Zelle payments, on the other hand, are irreversible. That puts the onus on users to make sure they’re paying the person they intend to each and every time they use the tool.

Once a user sends money through Zelle, they cannot reverse the transaction.

Of course, credit cards also offer rewards programs that Zelle has yet to match. 

As the company works with more and more people — its latest financial institution additions brought another 7.5 million bank accounts across the country within Zelle’s reach — credit card issuers have an opportunity to educate their customers on why using a credit card can be more beneficial when it comes to paying companies.

People who understand the security benefits and financial rewards that credit cards offer over Zelle payments may be more inclined to reach for their card the next time they make a payment to a business.