When you need to send or receive money from someone, you have a number of digital options at your disposal. However, the two giants in the room are PayPal and Venmo, so much so that both are used as verbs, like “PayPal me” or “Venmo me.”
How you choose wisely depends largely on the type of transaction you want to make and the parties you want to exchange funds with. For example, personal transactions with people you know, like paying for babysitting or sharing restaurant bills with friends, are especially good for Venmo, and you can also make your payments more social.
PayPal is now the go-to for more purchase-oriented transactions, such as B. buying from a merchant or accepting payments from your own customers. When it comes to commercial payments, Venmo leans more towards peer-to-peer (P2P) transactions, while PayPal leans more towards business-to-consumer (B2C) platforms.
However, there is some overlap between the two payment services. To help you make your choice, we’ve delved into the details of features, cost, speed and versatility to give you all the information you need to make an informed choice.
Venmo vs PayPal: Accessibility
PayPal and Venmo both have their own free apps for iOS and Android, where most users will use each service. Both have browser-based desktop versions. However, Venmo payments can only be initiated using the mobile app, while PayPal payments can be made through the app or website.
PayPal can also be used as a payment method for various online retailers, and even for in-store QR code purchases. While Venmo is working to build this merchant transaction capability across more retailers, its reach is currently very limited compared to PayPal’s very broad footprint.
Venmo vs PayPal: Sending Money
The process of sending money to someone is very similar for both apps. Both offer the ability to sync your contacts with the app, allowing it to look up any linked PayPal or Venmo accounts your friends and family have. But even if the app doesn’t list the contact you’re looking for, you can still send money using their username, email address, or mobile number.
After selecting the recipient and amount, both PayPal and Venmo will ask you which payment method to use. If you have a positive balance on any service, you can use that balance for payments. Otherwise, funds will be debited from the bank account, debit or credit card you have designated as your preferred payment method for this transaction.
Once you click Submit on the payment, the amount will be credited to the user’s PayPal or Venmo balance within minutes (usually seconds). For both apps, you should double check that you’re sending money to the correct contact, as the company won’t refund your money if you send it to the wrong person.
Venmo vs PayPal: Asking for money
It’s also possible to receive money from people who use both PayPal and Venmo. With Venmo, you can request money from others, create a reminder for someone to pay, or give them easy access to your contact information and request the correct amount to pay. PayPal just provides a platform for someone to easily send you money, but it doesn’t have a “request” feature like Venmo.
Once the person receiving your payment request responds with a payment, the money will be added to your PayPal or Venmo balance almost immediately. From there, you can use these funds for future payments (or merchant purchases in the case of PayPal), save them in your account for later use, or transfer them to your linked bank account.
If you choose to transfer funds to your bank, both PayPal and Venmo give you another option for how quickly you can complete the transfer. You can choose the transfer for free, which is usually done the next day, but it can take up to two to three days for both applications. If you’re in a hurry, both Venmo and PayPal offer instant transfers for a small fee.
Venmo vs PayPal: Fees
The fees for both services are very similar. Both offer free payments from linked bank accounts, and both charge around 3% for credit card payments. They differ slightly in that Venmo is expanding its free options to include debit card payments, while PayPal only allows free payments directly from a bank account. For debit and credit card payments, PayPal’s fee is technically 2.9% plus 30 cents. Learn more about Venmo and PayPal fees.
The exception to paying with a credit card is with American Express. With the new development, American Express offers free payments via PayPal and Venmo, but payments must be initiated through the American Express app rather than using the PayPal or Venmo app. However, this allows users to pay with a credit card and avoid the roughly 3% fee on this transaction.
How quickly you want accumulated funds in your PayPal or Venmo balance to be transferred to your bank account, both platforms offer free options. With Venmo and PayPal, you can choose the standard transfer speed of one to three days for free, or upgrade your transfers to complete in seconds for a fee of 1.5% of the transfer amount. The transfer fee for both services is capped at $15, with a minimum fee of 25 cents.
If you use PayPal as a merchant to collect payments from customers, PayPal offers many different pricing options. At the same time, Venmo is not geared towards merchant business transactions, and it has transaction limits when it sees users treating personal accounts as business accounts.
Venmo vs PayPal: Limitations
For those looking to make large transfers, PayPal offers a powerful advantage. Individual payments are generally limited to a maximum of $10,000 per payment, with a total cap of $60,000. That’s significantly higher than Venmo’s limit of $6,999.99 per rolling 7-day period, which includes a person-to-person maximum of $4,999.99. In addition to the lower limit, Venmo requires an authentication step to access these limits. Until then, the maximum transaction amount was capped at $299.99.
Venmo vs PayPal: Additional Features
As you can see, the two services behave very similarly in terms of basic functionality and fee structure. But the two apps differ significantly in some areas. For example, with a strong focus on transactions between people you know, Venmo hosts social feeds of transactions between people you know, and also transactions between strangers if you choose to view the public feed.
Scrolling through your Venmo friends’ transaction feeds, you can see who paid whom and what notes they shared. The only thing missing is the quantity. The feed also supports emojis, which are almost more common than text on Venmo’s social feeds. Public sharing is the default when making your own transactions in the app, but you can change it to be visible only to your Venmo friends or only to recipients, either globally or on a per-transaction basis.
PayPal differs from Venmo in that it can be used by merchants who accept payments as well as buyers and shoppers at online and brick-and-mortar retailers.
PayPal also offers international transactions. With transactions in over 200 countries and approximately 25 different currencies, PayPal is the app of choice for those looking to send or receive money from outside the United States. By contrast, Venmo is only available on U.S. exchanges.
Finally, both Venmo and PayPal offer their own credit and debit cards, although Venmo’s offerings in this space are still in their early stages. Buying a debit or credit card allows anyone who accepts that type of card to pay directly to your PayPal or Venmo account.
Venmo vs PayPal: Business Features
PayPal continues to cement its reputation as the digital payments app of choice for merchants, offering small businesses a wealth of tools that are completely absent from Venmo’s person-to-person business model.
For example, merchants who set up a PayPal business account can use the service to set up the financial transaction aspects of selling items online, making it easy to accept credit and debit card payments from anywhere in the world. In exchange for this ability, traders agree to deduct a small fee from each transaction.
However, PayPal’s support for small businesses goes far beyond accepting payments. PayPal Business also provides assistance with billing, product shipping, and marketing insights. Some services are included in the basic plan for businesses, while others are available to those with a PayPal Payments Pro account, which incur a monthly maintenance fee.
Growing businesses looking to expand can also benefit from the working capital and business credit provided by PayPal.
Venmo vs PayPal: Review
Both the Venmo and PayPal apps have received similar third-party customer reviews. Reviewers cite ease of use, design, and the ability to make payments and inquiries with just a few clicks.
What are Venmo and PayPal?
PayPal and Venmo are both digital payment tools that operate primarily as smartphone apps. Just like writing a check draws funds from a linked bank account to make a payment, making a payment with Venmo or PayPal works the same way, with two modern differences.
First, by paying with Venmo or PayPal, users can choose where to withdraw their money, whether it’s the user’s primary checking account, secondary savings account, debit or credit card. Second, the transfer of funds is instantaneous in nature, unlike checks, which must be cashed and can bounce if funds are insufficient.
PayPal has been a pioneer in the field since its inception in the late 1990s, and quickly became the payment tool that powers millions of eBay transactions. Wen Mo, on the other hand, is new, albeit very popular. Founded in 2009, Venmo was acquired three years later by Braintree in 2012 and later by PayPal.
How do Venmo and PayPal work?
The basic functions and settings are the same for both services. You use the service to create a free account and set up your security credentials. You can then link at least one bank account to transfer money, and optionally add other payment methods, such as additional bank accounts or debit and credit cards.
When you’re ready to pay someone, enter or search for their contact information, enter the amount to pay, and select the payment method you’d like to use for the charge. Venmo includes a button to request funds instead of sending them – PayPal doesn’t have a “request” button, but still allows you to receive funds.
PayPal and Venmo fund your payments by creating an ACH transfer between your linked bank accounts, and those who choose to use a debit or credit card will see the payment amount added to your statement, just like any Same as other purchases.
Who should use Venmo or PayPal?
Venmo is ideal for those who make personal payments primarily to people they know and trust. With its social interface, paying with Venmo and sharing among your contacts feels like a friendly and personable arena.
PayPal can also be used to pay your friends and family. Which platform is best for you depends on which of your contacts use more.
However, if you sell products or regularly pay for online purchases, a PayPal account will serve you better. While Venmo has started setting up Venmo business accounts, it’s still a nascent service.
In contrast, PayPal has been serving merchants and small businesses since 1998 and offers the most comprehensive menu of merchant support of any digital payments app.
How we rate Venmo vs PayPal
To help you understand when these two digital payment apps make the most sense, we’ve covered PayPal’s and Venmo’s terms regarding functionality, payment transaction fees, bank transfer fees, transaction limits, and business/merchant offerings. By comparing these aspects head-on, it should be easy to see which app is best for your different needs, or perhaps conclude that having an account per app is the best option.
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