Silicon Valley

Five of the largest U.S. banks are set to launch a new mobile payment system that could overhaul the way individuals exchange funds digitally. Executives from the banks said they are planning to activate segments of the new network this week, according to a report from Reuters. Details of the launch were announced Monday.

Another two dozen banks and credit unions are expected to join the new payment network, called Zelle, over the next year.

The network would allow customers to exchange money using their smartphones, its sponsors say. They say it is an improvement over Venmo, an earlier system, that alerts users when a money transfer is in progress but takes time to shift funds between accounts. Venmo is owned by PayPal Holdings.

The Zelle network was created by Early Warning Services, an industry consortium whose owners have more than 86 million mobile banking customers. JPMorgan Chase, Bank of America, Wells Fargo, U.S. Bancorp, and Capital One Financial are the five banks initiating the launch.

“By coming together to offer Zelle, we are providing a large majority of Americans with a safe, fast and easy way to move money,” Bill Wallace, head of digital at JPMorgan Chase, said.

Assembling the Zelle network required fierce rivals to cooperate. The bank-sponsored product would leapfrog other payment platforms from Facebook, Google, and Apple, which were considered sleek but scattered, and which lacked a critical mass of account holders on a single network.

“Fragmentation has been frustrating for consumers. Inconsistent experiences, have made it difficult to send and receive money between banks,” Early Warning Services CEO Paul Finch said. Finch said the Zelle network “unites” the financial community under one person-to-person, real-time “payments experience.”

In a statement, Zelle said the platform allows participants to send funds from one account to another using only a recipient’s email address or mobile number. The product works within the mobile banking apps of Zelle network participants. No additional app needs to be downloaded. The transfers take “minutes,” according to the statement.

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