The CHUCK Network’s Focus: Create A Better P2P Experience, Not Compete With Zelle

Rather than compete directly with Zelle and other peer-to-peer payment networks, the recently launched CHUCK network plans to position itself as a P2P network that eases money transfers for users, officials say.

One such feature in the works is the ability for users to create a directory of destinations to allow faster transactions when money is sent to specific individuals. For example, if John Smith typically sends money to Jane Doe’s crypto wallet, that information can be stored and automatically invoked to send future payments to Jane Doe, according to Jason Henrichs, chief executive of Alloy Labs Alliance, a consortium of community and mid-size banks.

“We want consumers to be able to send money where they want, and if someone prefers to receive money in their bank account or in a social-media account, money can be sent there,” Henrichs says. “This is about creating a better user experience, not competing with Zelle.”

Creating strong brand recognition will likely be key to the network’s success, says Sarah Grotta, director of the debit and alternative products advisory service at Mercator Advisory Group.

“Banks coalesced around Zelle because they thought it was important to have a single brand for P2P payments,” Grotta says. “That’s where prior P2P networks failed. It will be interesting to see how consumers respond to this.”

Henrichs counters that a single brand for the new P2P service is not imperative, as member banks will be marketing the service using their brand. That strategy is logical, he says, as members have embedded the service in their respective mobile banking apps, which they brand themselves. CHUCK is the name for the network behind the P2P service. 

“Popmoney had a single brand and never took hold,” Henrich says. “Banks can brand [the service] however they want, but because it is part of their mobile-banking apps, it is part of the banks’ [branded services], not another P2P app consumers have to download.” Henrichs says. “Banks can also layer on other features through the mobile app to enhance the user experience. We think the people this will appeal to are those that have not downloaded a P2P app.” Popmoney is a Fiserv Inc. service.

One advantage CHUCK offers to community banks will be a lower fee structure than that of Zelle, which reportedly charges participating banks between 50 cents and 75 cents per transaction. Alloy Labs plans to set fees based on a bank’s size and transaction volume through the network.

“A bank of modest size probably isn’t going to generate the volume that earns them the lowest price.” Henricks says. “Our approach is to offer a reasonable price based on the bank’s size and volume.”

Lower transaction fees are expected to play well with community banks looking to add a P2P service. “Smaller banks have struggled with Zelle because of the fees,” Grotta says. “And if they connect to Zelle through a processor, the processor layers on its own fees, which raises the costs further.” 

The ability to provide advanced digital payment services to consumers is important for small banks, as 60% to 70% of consumers use P2P apps, Grotta says. “If small banks want to be thought of as the place to go for digital services, they need these kinds of capabilities,” she adds.