Thanks to innovations in the Fintech industry, financial transactions have become easier than we ever imagined. Venmo and PayPal are two of the most popular payment systems in the industry.
Basically, they can be used to send and receive money. Although there are many similarities between Venmo vs PayPal, there are differences that have made some users believe that one is better than the other.
Realistically, PayPal is the parent company to Venmo. It has long been a pioneer in the digital payment space. Regardless, PayPal has long been the leader in digital payments.
Therefore, in this article, we will have a close look at the difference between PayPal and Venmo. We’ve reviewed the Venmo vs PayPal tussle based on cost and fees, ease of use, transaction limits, ratings, where each can be used, and lots more.
After reading through this guide, you’ll be able to decide which platform is better for you between PayPal and Venmo. Stay with us!
PayPal vs Venmo: An Overview
PayPal Holdings Inc. and Venmo are the two big names in the financial industry.
PayPal came into existence as a trusted payment system for eBay. It has ever since evolved to a lasting e-wallet payment solution.
Venmo on the other hand can be linked to the new guy in the digital wallet world compared to PayPal. Millennials now use it as a slang “to Venmo”. Venmo is a subsidiary of PayPal.
In 2012, Venmo was bought by Braintree, and then in 2013 Braintree was acquired by PayPal. This is how Venmo became a PayPal company.
Also Read: Turbotax Reviews 2022: How It Works
Brief History of Venmo
Venmo was originally founded in 2009 but released to the public as a money transfer app in 2012 for iPhone and Android users.
It is a free-to-use payment system that operates using the P2P (peer-to-peer) market. Users can quickly share payments by attaching their bank accounts or credit and debit cards to the service.
Bank transfers from the app are free of transaction fees while there is a fee for instant transfers to cards.
The app is owned by PayPal and is currently only available to users within the U.S.
Overview of PayPal
PayPal is one of the first payment services and digital wallets. Just like Venmo, customers have to connect their bank accounts and credit or debit cards to their accounts.
Additionally, PayPal has expanded its products and services into an almost bank space that even offers loans and business products.
It was originally the payment provider to eBay.
According to Datanyze, PayPal has over 60% market share of the fintech space.
Lastly, PayPal was founded in the 1990s by several high-profile entrepreneurs including Peter Thiel and Tesla TSLA CEO Elon Musk.
How Does Venmo and PayPal Work?
The payment system of Venmo and PayPal are quite similar.
PayPal and Venmo can be accessed online or through mobile apps. Venmo can only send and request payments through the mobile app.
Both Venmo and PayPal process payments using the existing balance or by drawing funds from connected bank accounts or credit cards.
Who Should Use Venmo or PayPal?
PayPal is best for online merchants who want to offer additional payment options to their customers. PayPal offers both buyer and fraud protection so people and businesses can be assured they’re protected.
Venmo is the easiest app for sending money between two people. However, it doesn’t have buyer protection like PayPal, so it will be better to send money only to people you know.
Venmo vs. PayPal: What’s the Difference?
We have already mentioned that Venmo and PayPal have lots of similarities. They are part of the same company and share similar models.
Here are some of the differences between Venmo and PayPal.
Security
The major concern of users of cash apps is safety. Don’t be perturbed, we’ve got that sorted out.
Venmo has bank-level security and encryption as well as a personal PIN code the app gives users for mobile transactions.
PayPal has a similar security and encryption system. But, unlike Venmo, you don’t have to register to transfer money.
According to the PayPal website, “When you send a payment using PayPal, the recipient won’t receive sensitive financial information like your credit card or bank account number. This way, you don’t have to worry about paying people you don’t know”.
In addition, users also receive a confirmation email whenever their transactions are successful.
Business
PayPal works well with individuals and businesses with many plans specifically designed for small businesses.
Among many other services is the Business in a Box plan. This involves a payment processing plan, the ability to set up an online store, financial tracking, and even funding through the PayPal Business Loan or PayPal Working Capital. You can sign up for fee but at set rates and other fees.
PayPal’s mobile card readers come with a 2.7% fee for swipe-up transactions, 3.5% plus 15 cents for scanned transactions, and a 2.7% fee for non-U.S. cards plus a 1.5% cross-border fee.
Venmo is designed more for P2P transactions as it doesn’t provide any special loans or fees for merchants.
Transfer Limits
With Venmo, users are allowed to transfer up to $3,000 at a time. PayPal has a transaction limit of $10,000.
This article will come in handy: How to get free $100 PayPal fund.
Venmo is primarily meant to cover more day-to-day purchases and transfers while PayPal is designed for both daily transactions and bigger withdrawals or transfers. This is why their limits vary.
Depositing Checks: Venmo vs. PayPal
Venmo allows users to deposit a check into their accounts by taking a picture of it with the Venmo app.
If the check is approved, the deposited funds are available within minutes.
Note that not all users are eligible for this feature, sign in to your Venmo app to see if it’s available.
Likewise, PayPal also allows users to deposit checks into their account using the app. To use this feature, you’ll need to sign up for PayPal Cash Plus unlike in the transfer service which doesn’t require you to sign up.
PayPal charges a 1% fee for payroll and government checks with a pre-printed signature and 5% for all other checks ($5 minimum fee per check).
Social
Venmo holds a strong social media followership. It allows you to add emojis, comments, likes to your transactions. You may also use the app for small transactions like paying for dinner, or a Lyft ride. PayPal doesn’t have such features.
Fees
Venmo vs PayPal? They have a similar pricing structure. Both apps are free to download and offer free transfers to bank accounts.
However, both services charge a 2.9% fee for credit and debit transfers, but PayPal adds 30 cents for credit transfers. Venmo waives the fee for debit cards but charges 25 cents for instant transfers to debit.
Requirements: Venmo vs. PayPal
PayPal allows users to create an account using an email while Venmo requires a mobile phone number.
Withdrawal Speed
PayPal and Venmo have comparable withdrawal speeds. PayPal typically has a withdrawal speed of one to two business days, Venmo gives one day.
Special Features
PayPal operates a growing business with its constant expansion. They now perform services like extending credit, financing purchases and even giving customers a MasterCard.
More stores accept Paypal as a means of payment than Venmo.
Venmo accounts have user photos, PayPal also has a shareable link called PayPal.me that allows users to know who is sending or receiving money. You can get paid following the link.
Read Also: How to Make $100+ on PayPal Daily (Full Guide)
Venmo vs. PayPal: Which Is Better for You?
Earlier, we mentioned that at the end of this article, you’ll decide which payment system is better for you between Venmo and PaPal. Well, we’re here to keep the promise.
Largely, deciding the better app amongst Venmo vs PayPal depends on what you’re using the service for.
For instance, individuals who are paying small amounts to just a few people will prefer Venmo because it offers low fees and a simple format that appeals to many users.
The app is designed to better suit small and daily transactions than big transactions.
On the other hand, PayPal is best for users who need to perform large transactions. These can either be businesses and merchants or individual users. The payment service also includes an online shopping service that offers a wide range of products (loans and MasterCard inclusive).
Additionally, PayPal has a wide number of retailers who accept it as a medium of payment.
Although Venmo vs PayPal functions similarly, Venmo is better for users who transact with a smaller amount and a few users as they are low/no daily fees. Users who make lots of transactions that involve large purchases should transact with PayPal.
Make your pick and figure out the payment app you want to transact with.
Read: How Does Venmo Make Money.
Conclusion
Our conclusion will bring to you Venmo vs. PayPal at a glance
| Platforms | iOS, Android, web* | iOS, Android, web |
| Payment Methods | Credit, debit, bank transfer | Credit, debit, bank transfer |
| Credit Card Fee | 3% | 2.9% + $0.30 |
| Debit Card Fee | Free | 2.9% + $0.30 |
| Bank Transfer Fee | Free | Free |
| Transfer Limit | $4,999.99 | $10,000 |
| Withdrawal Timeframe | 1 Business day | 1–2 Business days |
| Fee | Free to use | Free to use |
| Best for | Everyday users (P2P) | Businesses (Merchants) |
| Availability | U.S. only | 200 Countries |
Conclusively, Venmo only lets users make payments using its mobile app.
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