Aiming for International Reach: Early Warning Services and Zelle’s Stablecoin Plan
The consortium behind Zelle, a major player in U.S. domestic payments with over 150 million users and $1 trillion in processed transactions last year, is considering the minting of its own stablecoin. This move could significantly expand Zelle’s service offerings, particularly by facilitating cross-border payments.
Zelle has seen substantial growth since its launch in 2017, distinguishing itself through a free transaction model. However, it currently faces competition from PayPal, which offers cross-border capabilities and recently unveiled its own stablecoin platform for such purposes. Zelle could look to enter this space with its own stablecoin, primarily targeting the ability to enable international transactions.
Stablecoins on the Rise: The GENIUS Act and Beyond
The potential introduction of Zelle’s stablecoin is part of a broader trend in financial services. Numerous institutions are exploring or already piloting their own stablecoins, driven by the passage of the GENIUS Act, which simplifies regulatory paths for such initiatives. Citigroup, JPMorgan Chase, and Bank of America have all shown interest in entering this field.
For Zelle to succeed, offering free cross-border payments would be a compelling strategy. Current traditional remittance methods typically charge between 0.5% and 2.0%. Stablecoins like Solana already offer significantly lower fees, with the Solana platform charging only pennies for such transactions. Ethereum, while more expensive, still keeps costs low compared to traditional methods.
Challenges and Opportunities
Zelle must carefully consider whether it should charge for cross-border payments. While offering free services could attract a larger user base, imposing fees might deter users who opt for cheaper alternatives like Solana’s stablecoin solutions. Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, suggests that Zelle should be cautious about setting too high a fee.
A spokesperson for Zelle did not provide any comment on the potential stablecoin plans.
