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Several mobile payment apps and peer-to-peer payment tools can help you send and receive money fast. You may be more familiar with Venmo and PayPal, two of the most popular apps out there. If you are trying to decide between these two services, it helps to know how they work and the pros and cons of each.
Here’s an overview of Venmo and PayPal and how these platforms can help you send money, receive money, and buy online.
Venmo vs. PayPal: a sneak peek
Venmo is owned by PayPal and part of PayPal’s larger family of brands. This mobile payment application allows you to send and receive money quickly. The company describes its service as making sending money “safe, easy and social.” You can also use Venmo to make purchases through the mobile app, online, or in person. Venmo has 65 million users.
Who is it best for? Venmo is designed to be a social, user-friendly app. If you had to pay a friend last night’s restaurant bill, or if you need to share the rent payment with your roommate, Venmo is designed to be a fast, cost-free way to complete these transactions. Some small businesses also use Venmo to receive payments.
How it works
Venmo allows you to connect your bank account, debit card, or credit card, then use the app to make payments or send money and transfer money to your external accounts. In addition to connecting your external bank and card accounts, you can keep money in Venmo as part of your Venmo balance that you can use to spend or send money.
You can also sign up for direct deposit to have your paycheck go straight to your Venmo account, up to two days earlier than your regular paycheck. Your Venmo balance is eligible for transfer FDIC insurance through Venmo’s partner banks, Wells Fargo Bank, and The Bancorp Bank, but only if you’ve purchased cryptocurrency or added money to your Venmo account through direct deposit or remote check capture.
Venmo has weekly transaction limits for person-to-person payments, merchant payments, and debit card purchases. For person-to-person payments, the maximum is $ 4,999.99 per week. That’s $ 6,999.99 for authorized merchant payments and the same for Venmo Mastercard debit card purchases. The overall combined spending limit each week is $ 6,999.99. For example, let’s say you spend $ 3,800 on person-to-person payments in a week. You will have $ 3,199.99 left to spend on authorized merchant purchases and Venmo Mastercard debit transactions during the rolling weekly period.
- Easy to send and receive money quickly and buy online
- Invoice low cost, unless you do certain types of transactions or receive payment as a small business owner
- Offers interactive social features and colorful emojis to make payments friendly and fun
- Offers debit cards and credit cards
- Only available in the United States
- Has an aggregate combined weekly spending limit of $ 6,999.99 for person-to-person transactions, merchant payments and Venmo Mastercard debit purchases
- Not as widely accepted in business as other forms of payment, such as debit cards, credit cards, or cash
- Charges 1.5% fee for instant money transfer to your external bank account or debit card
- Privacy settings can be difficult to navigate – transactions can be publicly visible to app users
Founded in 1998, PayPal was one of the first digital payment companies. It started as a method for people to email money or pay for eBay purchases. Today, PayPal connects merchants and customers in more than 200 countries, with 392 million consumer and merchant accounts.
PayPal is a publicly traded company (NASDAQ: PYPL) that owns several other brands in online shopping and payments, including Venmo, Honey, Xoom, and Zettle. This digital payment service is available online and on mobile. It has a mobile app for iOS and Android that lets you make payments, send money to friends and family, request money, and more.
Who is it best for? Compared to Venmo, PayPal has similar functionality for sending money to friends and family and shopping online, but it offers a more robust range of payment solutions for small businesses. If you need to accept payments from customers in person or online, PayPal might be a better choice than Venmo.
How it works
PayPal offers several ways to make payments or send and receive money:
- Buy online. When you buy online with PayPal, you can use your PayPal account without entering your personal financial information.
- Pay in person. If you shop at a company that accepts PayPal payments, you can pay directly from your PayPal account, for example using a QR code.
- Send money to over 200 countries. If you have a friend or family member in other countries, you can send them money securely with PayPal.
- Receive money through your own PayPal.me link or QR code. Or, collect money from a group of friends with a jackpot.
Like Venmo, PayPal allows you to connect your external bank account, debit card, or credit card to your account and use it as a source of funds. You can also spend and send money directly from your PayPal account balance.
If you have a verified PayPal account, there is no limit to the amount you can send from your account within a given period of time. In a single transaction, you can usually send up to $ 60,000, but this can be limited to $ 10,000.
- Accepted by millions of traders
- Available in over 200 countries; PayPal lets you send money worldwide in 25 currencies
- Robust business tools, providing reliable ways to get paid and make payments more convenient for customers
- Fees are complicated: PayPal has a more complex fee structure than Venmo
- PayPal charges a 1% fee for instant money transfer to your external bank or debit card
- User experience is more complex than Venmo
Venmo vs. PayPal: A Closer Look
PayPal allows you to send money to anyone in over 200 countries and 25 currencies, as long as you have the recipient’s username or email address. Venmo allows you to send money to anyone in the United States who has a phone that can receive text messages. If the recipient does not yet have a PayPal or Venmo account, they will be prompted to create one. With both services, you can sync your contacts with the app.
Venmo generally allows you to send money at no cost, as long as you send money from your Venmo balance, bank account, or debit card. If you use your credit card to send money, you will pay a 3% fee.
PayPal allows you to send personal transactions free of charge if the money is coming from your PayPal balance or bank account, but, if you are using a credit card or debit card, you will pay a 2.90% fee. plus additional fixed costs based on currency. You will also pay a fee for international personal transactions.
Receive and request money
There is no charge to receive money for personal transactions on Venmo or PayPal (when no currency conversion is involved).
The Venmo app is available in the App Store (rated 4.9 out of 5 stars) and Google Play (rated 4.3 out of 5 stars). The PayPal mobile app is available in the App Store (rated 4.8 stars out of 5) and Google Play (rated 4.2 stars out of 5), or you can log into your PayPal account online from any Navigator.
Venmo Fees vs PayPal Fees
Perhaps the most noticeable difference between PayPal and Venmo fees for most personal users is that PayPal charges a 2.90% fee for personal debit card transactions, while personal debit card transactions are. free on Venmo.
Pay attention to the type of transaction you are doing. PayPal and Venmo both charge an additional fee (around 1%) for instant transfers when you transfer money to your external bank account or card account. And both charge to send money with a credit card: 3% with Venmo, 2.90% on PayPal.
PayPal and Venmo also charge fees for business transactions. So, if you are receiving payments as a business owner, freelance writer, or entrepreneur, be prepared to pay fees for these transactions.
Venmo has business features that allow small businesses to accept Venmo payments in person or online, using point-of-sale QR codes. You can create a Venmo business profile for your small business and get paid through the app the same way people use Venmo to pay their friends.
PayPal offers a more extensive commerce system for businesses, with features and services such as point of sale (POS), payments and invoicing, business debit cards, working capital and business loans, l ‘dispatch and dispute management, etc.
Frequently Asked Questions (FAQ)
What security features do Venmo and PayPal offer?
Venmo uses encryption to protect your account information. You can also work with Venmo to set up multi-factor authentication or create a PIN for your account. PayPal offers similar security protections to Venmo, but it also provides a more robust set of security features for businesses.
Are Venmo and PayPal FDIC insured?
It depends on how you use your account. Venmo and PayPal are not banks, and keeping money in your Venmo or PayPal balance is not the same as keeping it in an FDIC insured bank account.
However, if you use direct deposit for Venmo or PayPal, that money is transferred and held by each department’s banking partner, where the funds are eligible for FDIC pass-through insurance up to applicable limits. In addition, if you have a PayPal Cash Plus account and a PayPal Cash Mastercard, FDIC transmission insurance also applies.
If you want the security of FDIC insurance, make sure your PayPal or Venmo deposits are eligible.
Can I withdraw money at an ATM from my Venmo or PayPal account?
Yes, if you have configured a Venmo or PayPal debit card for the account. The Venmo Debit Card offers free withdrawals from MoneyPass ATMs in the United States. The PayPal Cash card allows you to withdraw money free of charge from 33,000 MoneyPass ATMs around the world.