Here's What Happens When Your Banking App Doesn't Accept Zelle

I like my digital banking app, Chime. It's simple and convenient. But it's incompatible with Zelle, a money-transfer service some banks and credit unions offer.

Here's how Zelle is supposed to work:

1. You open your banking app or Zelle app.
2. You send money to an email address or phone number.
3. The receiver gets a direct deposit OR a link that prompts them to sign up for Zelle.

If both are traditional bank users, this works like a dream. All you need to do is follow Zelle's instructions, which may include downloading the Zelle app.

However, if you exclusively use Venmo, Cash App, and/or Chime, you're fresh out of luck. Zelle is not compatible with digital-first banking apps. This could be because traditional banks created Zelle, and digital banking services are competitors. Whatever the reason, they're incompatible.

I use Chime, a popular banking app. Friends try to Zelle me, but it never works out. Here's what happens when your banking app doesn't accept Zelle.

You can't send or receive payments through Zelle

Short answer: Venmo, Cash App, and Chime users cannot send or accept Zelle payments. Period. Do not pass go. Do not collect $200.

This you? Say a friend sends you cash via Zelle. You'll get a link via text or email prompting you to sign up for Zelle. You can try, but Zelle will reject your debit card and say your bank is unavailable.

You might be tempted to create a new Zelle-approved checking account to accept a pending transfer. Hold up -- some banks require new account holders to wait three months before you're allowed to receive Zelle payments. (I'm looking at you, Discover Bank.)

You probably don't want to wait that long. Alternative: Swap hard cash with your friend. But if you're like me, you only carry cards and digital wallets. Fortunately, there's another option.

How to accept payments from Zelle users

Have both parties manage transfers through a free payment app. The most popular of these are Venmo and Cash App. Here's how to get an account set up fast:

1. Download Venmo or Cash App from the App Store.
2. Connect your bank account to the app.
3. Send funds or request money from a friend's account.

It's quick and easy to set up a Venmo account, taking five minutes or so. Alternatives include exchanging cash or services (have your friend pay for your next meal together).

Zelle vs. payment apps

Zelle only works with banks and credit unions. But it's free, and Zelle typically settles money within minutes.

Payment apps work with digital banking services, but they charge users for instant settlement. If you want to send $10 from Venmo to Chase instantly, you must pay a fast-transfer fee. Free users must wait two to three business days for that $10 to hit their savings account.

I've never had an issue with Venmo or PayPal. Nor do I mind waiting for transfers to hit my account, though I do sometimes pay for instant settlements. Zelle, on the other hand, simply doesn't work for my needs. My banking apps aren't compatible.

TL;DR: Zelle is fast but only works with more traditional banks. Other payment apps charge for instant settlements, but work with any bank account. Zelle users should use cash or free payment apps to send money to Venmo, Cash App, and Chime users.