Zelle is shutting down its stand-alone app on Tuesday, according to a company blog post.
This news might be alarming if you’re one of the over 150 million customers in the U.S. who use Zelle for person-to-person payments. But only about 2% of transactions take place via Zelle’s app, which is why the company is discontinuing its stand-alone app.
Most consumers access Zelle via their bank, which then allows them to send money to their phone contacts. Zelle users who relied on the stand-alone app will have to re-enroll in the service through another financial institution.
Given the small user base of the Zelle app, it makes sense why the company would decide to get rid of it — maintaining an app takes time and money, especially one where people’s financial information is involved.
Zelle launched in 2017 with backing from 30 banks to be a more efficient alternative to Venmo. On Venmo, users can receive payments into their own Venmo wallet, which they can then deposit into their actual bank account — but if you don’t want to wait a few days for the deposit to process, you’ll have to pay a fee for an instant transfer. Because of Zelle’s connections with banks, it’s able to offer instant transfers without charging additional fees.
Zelle said that in 2024, users sent $1 trillion in payments, breaking the record of any other payment app. This might be the case because consumers tend to use Zelle for larger payments like rent. Venmo, on the other hand, is designed for more social use, like reimbursing a friend for dinner.
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As it gears up to go public, Chime is going all in on new features in an effort to attract more customers.
The digital bank is offering customers who agree to have their paychecks directly deposited into a Chime savings or checking account an APY of 3.75%, it tells TechCrunch exclusively. For those who don’t choose to direct deposit, the interest rate of 2% for standard users is still competitive.
By comparison, the national average savings account yield is 0.61% APY, according to Bankrate’s survey of institutions as of the week of March 24.
While Chime Chief Product Officer Madhu Muthukumar didn’t say it outright, the move appears to be one at least in part aimed at attracting more stickiness among customers. As of last summer, Chime had 7 million customers and $1.5 billion in annualized revenue, according to reporting by Forbes. The company declined to provide updated figures.
In December, Chime filed confidential paperwork to go public with the U.S. Securities and Exchange Commission. Chime was last valued at $25 billion when it raised $1 billion at the height of the valuation frenzy of 2021, and has raised $2.65 billion total, PitchBook estimates. Its investors include Forerunner Ventures, Menlo Ventures, Crosslink Capital, Sequoia, SoftBank, Tiger Global, and many others.
The company also declined to comment on potential IPO timing.
To be eligible for the 3.7% APY, Chime customers must agree to become members of Chime+, a premium membership tier that requires the agreement to direct deposit their paychecks. There is no charge to join as a premium member.
Founded in 2012, Chime markets itself as the bank alternative for everyday Americans. It touts that it doesn’t charge overdraft, maintenance, or low balance fees or require account minimums.
“These are people who you would find in your community, whether they make a coffee in your local store, teach your children, deliver a package, or help you find something in your big box retailer,” Muthukumar said.” This is your neighbor.”
Its customer base skews slightly female, he told TechCrunch, with members more in the 30s age range as opposed to “super young folks” and are “gainfully employed.”
In 2020, Chime began offering a credit card that it claims helps users build and improve their credit by setting purchase limits based on account balance and acting more like a debit card. Now, members no longer have to direct deposit through Chime to apply for and use Chime’s Credit Builder Visa credit card.
Other features that Chime is announcing Monday include a redesigned app, an expanded set of “deals” or discounts specifically for Chime users, cashback offers, and “dedicated” customer support. On March 21, it also announced a new “instant loans” product.
Financial technology companies continue to get creative in attempting to woo customers. Last week, Robinhood announced that it was going to begin offering wealth management and private banking services to retail investors, touting that such services were “no longer reserved for the wealthy.” As part of that new offering, Robinhood says it will provide a 4% APY on savings as well as assistance with estate planning and taxes, among other things. Uniquely, it also will offer cash delivery to a user’s doorstep.
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