Venmo vs. PayPal

Choosing the right digital payment app depends on the types of exchanges made

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When you need to send someone money or accept a payment from them, there’s no shortage of digital options at your disposal. The two giants in the space, however, are PayPal and Venmo, to the point that each has come to be used as a verb, as in “PayPal me” or “Venmo me.”

How to wisely choose one over the other largely depends on the kinds of transactions you want to make and the parties with which you want to exchange funds. For instance, personal transactions with people you know, such as paying your babysitter or splitting a restaurant bill with friends, are particularly well-suited to Venmo, where you can also make your payments a more social affair.

Meanwhile, PayPal is the leading choice for transactions that are more purchase-oriented, such as buying from merchants or accepting payments from your own customers. In terms of business payments, Venmo is geared more towards peer-to-peer transactions (P2P) and PayPal is more a business-to-consumer platform (B2C).

But there is a fair bit of overlap between the two payment services. To help you choose between them, we’ve dug into the details on features, fees, speed, and versatility, giving you all the information you need to make your own smart choice.

* An identity verification step is required to access these limits. Until then, the maximum transaction amount is capped at $299.99.

PayPal vs. Venmo at a Glance

Venmo


Venmo

 Venmo

Pros
  • Trusted transactions

  • Syncs contacts

  • Free from linked bank accounts

Cons
  • U.S. only

  • Primarily smartphone platform use

PayPal


PayPal

 PayPal

Pros
  • Wide platform availability

  • High transaction limits

  • Global reach

Cons
  • Can hold funds

  • High business user complaints

Venmo vs. PayPal: Accessibility

PayPal and Venmo both have their own free apps for iOS and Android, which is where most users will go to use each service. They both also have browser-based desktop versions. However, Venmo payments can only be initiated with the mobile app, whereas PayPal payments can be made through the app or the website.

PayPal can also be used as payment with a wide variety of online merchants, and even for QR code purchases in-store. Though Venmo is working to build up this merchant transaction capability among more retailers, its reach is currently very limited compared to PayPal’s very expansive footprint.

Venmo vs. PayPal: Sending Money

The process to send money to someone is fairly similar across the two apps. Both offer the ability to sync your contacts to the app, enabling it to search for any associated PayPal or Venmo accounts held by your friends and family. But even if the app doesn’t surface the contact you’re looking for, you can send money using their username, email address, or mobile number.

After choosing the recipient and the amount, both PayPal and Venmo will ask you what payment method you’d like to use. If you have a positive balance with either service, you can use those funds for your payment. Otherwise, funds will be drawn from the bank account, debit card, or credit card you identify as your desired payment method for this transaction.

Once you hit send on your payment, the amount will hit the user’s PayPal or Venmo balance within a couple of minutes, often even seconds. With Venmo, you’ll want to make doubly sure you’re sending money to the right contact, since Venmo won’t refund your money if you send it to the wrong person.

Venmo vs. PayPal: Requesting Money

It‘s also possible with both PayPal and Venmo to request funds from someone. This is often done to create a tickler for someone to pay you, or to provide them with easy access to your contact info and the proper amount of the requested payment.

Once the person receiving your request for money acts on it by making a payment, the funds will hit your PayPal or Venmo balance almost instantaneously. From there, you can use those funds to make a subsequent payment (or, with PayPal, a merchant purchase), keep them sitting in your account for later use, or transfer them out to your linked bank account.

If you opt to transfer funds to your bank, both PayPal and Venmo give you the further option of how quickly to complete the transfer. Without a fee, you can choose a transfer that will generally be completed the following day, but can take up to two to three days for either app. If you’re in a rush, you can choose an instant transfer for a small fee.

Venmo vs. PayPal: Fees

Fees for the two services are fairly similar. Both offer free payments from linked bank accounts, and both charge about 3% for payments from a credit card. Where they differ slightly is that Venmo extends its no-fee option to payments made from debit cards, 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.

One exception to the fee on payments made with a credit card is on payments made via American Express. Through a very new development, American Express is offering free payments through both PayPal and Venmo, though the payment has to be initiated through the American Express app instead of using the PayPal or Venmo apps. But doing so enables users to pay with a credit card and avoid the roughly 3% fee on that transaction.

How quickly you want to transfer accumulated money from your PayPal or Venmo balance to your bank account also has free options on both platforms. Both Venmo and PayPal allow you to choose a standard transfer speed of one to three days for free, or to upgrade your transfer to take place within seconds for a fee of about 1%. Both services cap the transfer fee at $10, while Venmo additionally stipulates a minimum charge of 25 cents.

When using PayPal as a merchant collecting payments from customers, PayPal offers a number of different pricing options. Though none are free, they are on par with the industry average for digital payment tools. Meanwhile, Venmo is not geared toward merchant business transactions, and expressly prohibits purchase transactions not made with a Venmo-affiliated merchant.

Venmo vs. PayPal: Limits

For those wanting to make very large transfers, PayPal offers a strong advantage. Single payments are generally allowed up to $10,000 each, with a total cap of $60,000. That’s significantly higher than Venmo’s limit of $6,999.99 per seven-day rolling period, including a maximum of $4,999.99 in person-to-person payments. Be aware that an identity verification step is required to access these limits. Until then, the maximum transaction amount is capped at $299.99.

Venmo vs. PayPal: Additional Features

As you can see, the two services present fairly similarly on basic features and fee structures. But there are a few areas in which the two apps differ markedly. For instance, with its strong focus on transactions between people who know each other personally, Venmo hosts a social feed of transactions that have taken place among people you know, as well as those of strangers, if you opt to view the public feed.  

A scroll through the feed of transactions by your Venmo friends will show you who paid who, and with whatever note they shared. The only thing missing is the amount. The feed also supports emojis, which are almost more common than text in the Venmo social feed. When you make your own transactions in the app, sharing them publicly is the default, but you can change this to viewable only by your Venmo friends or only by the recipient, either globally or on a transaction-by-transaction basis.

Where PayPal stands out against Venmo is in its ability to be used by merchant sellers who are accepting payments, as well as shoppers and buyers at online and physical retailers. Originally established as the payments provider for eBay, PayPal excels in enabling transactions between people who don’t know each other, including offering protections for both sellers and buyers that Venmo doesn’t provide.

PayPal also offers international transactions. Covering more than 200 countries and transacting in about 25 different currencies, PayPal is the app of choice for those who want to pay or accept funds from those outside the U.S. In contrast, Venmo can only be used for U.S. exchanges. 

Lastly, both Venmo and PayPal offer their own credit and debit cards, although Venmo’s offering in this area is nascent. By acquiring a debit or credit card, payments to anyone accepting that card type can be charged directly to your PayPal or Venmo account. 

Venmo vs. PayPal: Business Features

Further cementing its reputation as the digital payments app of choice for merchants, PayPal offers a plethora of small business tools that are entirely absent in Venmo’s more person-to-person focused business model.

For instance, merchants who establish a PayPal Business account can use the service to essentially set up the financial transaction side of selling items online, making it easy to accept credit and debit card payments from all over the world. In exchange for this capability, merchants agree to a small percentage fee being subtracted on each transaction.

But PayPal’s support for small businesses goes far beyond accepting payments. PayPal Business also offers help with invoicing, product shipping, and marketing insights. Some services are included in the basic business package, while others are available to those with a PayPal Payments Pro account, which carries a monthly maintenance fee.

Growing businesses looking to scale can also benefit from PayPal’s provision of working capital and business loans up to $500,000, some of which can be accessed without a credit check.

Venmo vs. PayPal: Reviews

On both the Apple App Store and the Google Play store, the Venmo and PayPal apps receive similarly high marks: 4.9 stars on iOS with almost 11 million reviews, and 4.4 stars from about 443,000 Android users. Ease of use is a significant driver in the favorable ratings, with both apps being well-designed and enabling payments and requests with just a few easy clicks.

Venmo vs. PayPal FAQs

What Are Venmo and PayPal?

PayPal and Venmo are both digital payment vehicles, largely operated as smartphone apps. In the same way that writing a check draws funds for a payment from a linked bank account, making a payment with Venmo or PayPal does the same, but with two modern differences. 

First, when making a Venmo or PayPal payment, the user can choose where the funds will be taken from, whether it’s the user’s primary checking account, a secondary savings account, a debit card, or a credit card. Second, the transfer of funds happens essentially instantaneously, unlike checks that must be cashed, and that can bounce for insufficient funds.

PayPal is the pioneer in this field, having been established in the late 1990s and then soon after becoming the payment tool that has facilitated millions of eBay transactions over the last 20 years. Venmo, in contrast, is the new kid on the block, though a popular one. Founded in 2010, Venmo was acquired two years later by Braintree, and then by PayPal in 2013.

How Do Venmo and PayPal Work?

The basic functionality and setup of both services are the same. You create a free account with the service, establishing your security credentials. You then link at least one bank account for transfers and optionally add other payment methods, like additional bank accounts or debit and credit cards.

When you’re ready to pay someone, you enter or search for their contact info, enter the amount to pay, and choose the payment method you’d like to use for the charge. Conversely, both apps include buttons to request funds instead of sending them.

PayPal and Venmo fund your payments by creating ACH transfers to and from your linked bank account, while those opting to use a debit or credit card will see the payment amount added to your statement like any other purchase.

Who Should Use Venmo or PayPal?

For those making primarily personal payments to someone they know and trust, Venmo is the ideal choice. With its social interface, making payments with Venmo and seeing exchanges among your contacts feels like a friendly and personable arena.

PayPal can also be used for paying your friends and family. Whichever platform is best for you will depend on which one more of your contacts are using.

But if you’re selling products, or are regularly paying for online purchases, a PayPal account will serve you much better. Though Venmo has begun to establish a Venmo Business account, it is still a fledgling service.

In contrast, PayPal has been serving merchants and small businesses for more than two decades, and offers the richest menu of merchant supports of any digital payment app.

How We Evaluated Venmo vs. PayPal

To help you understand when each of the two digital payment apps makes the most sense, we delved into PayPal’s and Venmo’s terms on features, payment transaction fees, bank transfer fees, transaction limits, and business/merchant offerings. By laying out a head-to-head comparison on these aspects, it should be easy to see which app will best serve your different needs, or possibly concluding that the best option is to have an account with each.