Why is Ally Bank Limiting Zelle Amounts?

In August, many Ally Bank users were surprised to discover that their Zelle payments were canceled. Ally Bank lowered the limits for Zelle transactions, changing the daily maximum from $5,000 to a mere $500. A significant portion of their customers didn’t know they change took place until a scheduled payment or new transaction in excess of the new limit wouldn’t go through. While the speed at which the change went into effect left some customers in the lurch, Ally Bank likely didn’t make the decision arbitrarily. So why is Ally limiting Zelle amounts?

Why Ally Bank Might Limit Zelle Amounts

Ally Bank hasn’t been overly forthcoming about why it chose to lower the Zelle transaction limits. However, many financial institutions have similar limitations in place, and typically for a good reason.

As use of Zelle – a payment service that allows people to send money to nearly anyone with a US bank account – increases, fraud is often a bigger concern. While Zelle is backed by numerous big banks, it has also become a beacon for scammers.

Transaction size limits can function as a barrier when it comes to fraud and scams. They reduce the amount a scammer could receive from their target. Similarly, if an account is hacked, the limit also reduces the financial impact in that moment.

Zelle’s Limited Fraud Protections

Like traditional wire transfers, Zelle transactions are irreversible. Additionally, the payments can’t be disputed if the sender initiates the transfer. There is essentially no built-in fraud protection with Zelle, mainly because the person sending the money has to start the payment process.

The only exception is when an account is hacked. If a Zelle user can prove that they did not send a payment and that someone else broke into their account to access that money, then they are not liable for that activity.

Many Zelle users aren’t aware that so few protections are available. Zelle’s association with big banks makes it seem safer, leading some to assume that they could use Zelle for a range of transactions without much risk.

However, Zelle openly states that the service should only be used to send money to people the sender already knows. Since the transactions function similarly to handing a person cash, by only using Zelle to pay people you trust, you probably won’t be a victim of fraud.

How Lower Limits Potentially Protect Ally Customers

By placing strict limits on transaction amounts, Ally Bank may be trying to protect their customers from potential fraud or at least reduce its impact. Scammers can’t try to request large Zelle payments from Ally customers as that isn’t an option. The most they could get is $500 (instead of $5,000), so, even if a person fell for a scam, they might not lose as much of their money.

The Negative Impact of the Change

One of the biggest complaints regarding the lower limits is the inability to send large payments to a person the user knows and trusts. For example, some Ally customers were sending their rent through Zelle, allowing it to quickly arrive in their landlord’s account. With a $500 daily limit, many users can’t send all of their rent in one day. While they could potentially handle it in more than one transaction, spreading the total payment out over multiple days, that isn’t the most convenient approach.

For example, if a person had a $1200 rent payment, they could theoretically send $500 on day one, $500 on day two, and $200 on day three. Ally Bank doesn’t charge a transaction fee for using Zelle, so there is no financial penalty for using this approach. However, several transactions to one recipient could be viewed as suspicious by the bank, leading an account to be flagged or other issues to arise that would need to be resolved.

Zelle Limits at Other Banks

Each bank has the ability to set their own limits for Zelle transactions. While these limits can change over time, here are some of the daily limits (as of this writing) for other top banks:

• Bank of America – $2,500/day
• Capital One – $2,000/day
• Chase – $2,000/day for personal checking accounts, $5,000/day for business checking accounts
• Citibank – $1,000/day for accounts less than 90 days old, $2,000/day for accounts over 90 days old
• Citizen’s Bank – $1,000/day
• PNC Bank – $1,000/day
• TD Bank – $2,500/day
• US Bank – $1,000/day to $2,500/day, depending on the account
• Wells Fargo – $2,500/day

It’s important to note that a variety of factors may influence an individual customer’s Zelle limit. Additionally, banks can change their limits at any time, so it is important to check with your bank to see the most current limits.

Are you frustrated by Ally limiting Zelle amounts? Does Ally’s decision make sense to you? Share your thoughts in the comments below.

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