Varo Bank early Tuesday announced it has become the first digital neobank to be admitted to the Zelle peer-to-peer payments network. The bank, a unit of the 7-year-old, San Francisco-based Varo Money Inc., said it will now offer payments via Zelle through its mobile app.
“Adding Zelle to our product lineup is our bank charter in action”, said the company’s founder and chief executive, Colin Walsh, in a statement. “We are excited to welcome millions of Americans to access Varo’s full range of benefits on our modern, secure, digital-banking platform that now includes the ability to quickly send and receive money.”
Varo says it will not charge fees for Zelle transactions. To qualify to use the P2P service, which processes transfers in near real time, customers must have made a so-called direct deposit with Varo within the prior 31 days, Varo says. Qualifed deposits are electronic deposits of a paycheck, pension, or government disbursement from an employer or government agency, the bank says.
Varo, which opened its bank in 2017, has raised nearly $1 billion in investment since its founding two years earlier. Its last funding round, a Series E, occurred in September 2021. It is one of several so-called challenger banks that have emerged to use mobile and other technology to address what they regard as unmet needs among consumers. In December 2016, for example, Varo entered an agreement to use a so-called smart bot from developer Kasisto Inc. to help its customers navigate services offered through its apps.