TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment, Wells Fargo bans Zelle for Venezuelan users living abroad, a payments platform used commonly among the domestic population to acquire goods and services in stores.
Wells Fargo Bans Zelle Payments for Venezuelans
Wells Fargo, one of the most important banks in the US, decided to ban Zelle payments for Venezuelan customers living abroad, as CoinSpice learned from impacted Venezuelans on social media. Wells Fargo customers were notified via email, with a statement explaining as of June 26 Venezuela-related transfers (send and receive) would be censored.
The statement read, “Starting on June 26, 2020 we are removing your ability to send and receive payments with Zelle through Wells Fargo. Wells Fargo performs ongoing reviews of its account relationships and has elected to terminate your access to this services permitted under Section 28(b) of the Online Access Agreement and section 6.B of the Zelle Transfer Service Addendum.”
While Wells Fargo has not officially explained its reasoning for the move as of publication, Venezuela, of course, is under heavy economic sanctions from the US government. Stopping Zelle services could be another economic isolation strategy, forcing more reliance on the ever-depreciating value of the country’s official fiat currency, the Bolivar.
What is Zelle and Why It’s Important for Venezuelans
Zelle is a low cost, interbank transfer service that lets users enjoy free transactions between bank accounts using email. The most important feature here is its speed compared to other kinds of transactions. Typically, payment could be in the receiver’s bank account in a matter of minutes with the ease of having only to remember an email address. Such frictionless movement of fiat made Zelle a very appealing way of sending money from outside of Venezuela especially by ex-pats to their suffering countrymen.
Most businesses and stores in Venezuela accept Zelle as a payment service. Beyond its ease of use, it also is a way of storing funds without having to worry about carrying around physical cash denominations in a country where crime levels are very high. And, 64% of purchases made domestically are paid using US dollars, according to information from Ecoanalitica, an economic consulting firm. In some cities, the number is closer to 90%, though there is no published information as the percentage of such transactions are made with Zelle transfers.
This will inevitably impact the payment habits of many Venezuelans (thousands, according to Arnaldo Espinoza, a Venezuelan journalist) who were accustomed to using Zelle as a preferred payment method. They will now have to find alternatives. Traditional wire transfers won’t do the trick though, as many purchases Venezuelans make are valued under $20 — less than the fee required. And while the announcement so far seems just for Wells Fargo Venezuelan customers living abroad, it is possible other banks could also take equal measures.
One potential solution is with cryptocurrency’s so-called stablecoins. Some Venezuelans facing the problem of fiat devaluation already use them as a store of value independently from banks or intermediaries influenced by third parties. While the adoption of cryptocurrencies for practical payment uses has been very low in the country as a whole, with notable exceptions, sanctions have the potential driving Venezuelans together to try other, riskier alternatives free from censorship and bickering governments.
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