It hit the market well after people were seeing FedNow on the horizon. Why bother building something expensive that's obviously going to be obsolete in a few years?
If it was meant to compete with PayPal/Cashapp/Venmo, it was 10-15 years too late for that. Anyone who wanted it had it already.
I wonder if the value of Zelle is that it's still a private club. The customer safety and confidence stories have been terrible-- rejecting accountability, ignoring fraud and misuse. The banks are incentivized to say "our network, our rules."
FedNow, as a government entity, will eventually respond to controversial political forces like "people expect to be made whole in the event of fraud" or "payment platforms should provide a means of leverage in customer disputes".