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Popular payment services Venmo and PayPal make it easy for users to send and receive money — and make online and in-store purchases.
Electronic payments are more popular than ever. Since the beginning of the pandemic, 45% of Americans have moved to digital channels for retail purchases, according to a recent pymnts.com report. And $6.7 trillion in global digital payments are expected in 2021, the report said.
If you’re thinking about joining the millions of people who already use Venmo and PayPal, there are some things to consider before you get started. In this article, we’ll explore how both apps work, how to make payments and send or receive money, what fees and transaction limits you’ll see, and why you might want to use one app over the other.
- What are Venmo and PayPal?
- Venmo vs. PayPal: How they work
- Venmo vs. PayPal: Sending money and making payments
- Venmo vs. PayPal: Receiving money
- Fees: How Venmo and PayPal compare
- PayPal vs. Venmo: Transaction limits and timing
What are Venmo and PayPal?
Venmo and PayPal are apps that allow you to make electronic payments, which are payments sent and received through electronic channels — with no physical cash required.
PayPal owns Venmo, and while there are similarities between the two peer payment services, there are some key differences that might affect which one — if either — is right for you. Here’s a quick overview of each app.
|Availability||United States only||200+ countries, including the U.S.|
|Payment methods||Venmo account balance, bank account, credit card, debit card||PayPal account balance, bank account, credit card, debit card|
|Payment fees||No fee if you use your Venmo account balance, bank account or debit card; 3% if you use a credit card||For domestic transactions, no fee if you use your PayPal account balance or bank account — but 2.9% + 30 cents if you use a debit or credit card. International transactions also come with fees.|
|Bank transfer fee||Free for standard transfers (1–3 business days), 1% for instant transfers (25-cent minimum and $10 maximum)||Free for standard transfers (1–3 business days), 1% for instant transfers ($10 maximum)|
|Transaction limits||$6,999.99 for all transactions within seven days; up to $4,999.99 for a single person-to-person payment; up to $2,999.99 for a single merchant transaction||Up to $60,000 — but in some cases limited to $10,000 — for a single transaction|
|Best for||Sending and receiving money to and from people you know||Shopping online or in stores, accepting payments for your business, international transactions|
Venmo vs. PayPal: How they work
Let’s look at the major differences between Venmo and PayPal.
How Venmo works
Venmo is a mobile app that lets you send money to and receive money from people you know, as well as make in-app and mobile payments for goods and services at businesses that accept Venmo. Venmo’s social features make it great to use with friends and family.
The app’s built-in calculator automatically helps you split bills evenly — whether you’re paying for dinner or collecting the rent. And when you make a payment or send money, you can include a message too.
Venmo’s privacy settings let you decide who (other than the recipient) gets to see your payment. You can set your payment visibility to friends, public or private. You can also check out other people’s social feeds to see where they’ve been shopping and what they’re buying.
How PayPal works
PayPal is a network designed for both personal and business use. You can use it to make in-app, mobile, online and in-store purchases at participating merchants. You can also use it to accept client payments as well as send and receive money from friends and family. PayPal’s robust e-commerce features and international availability make it a better choice for business transactions.
Venmo vs. PayPal: Sending money and making payments
You can use your Venmo or PayPal account balance, money in your linked bank account, debit card or credit card to send money to friends and family or make purchases online and in stores. Here’s how.
Friends and family
To make sending money easier, Venmo allows you to sync your contacts from your Facebook account or phonebook with your Venmo account. And if you’re with the person you want to pay, you can scan their QR code to find their profile.
If you opt for PayPal instead, the app imports contacts from your email accounts when you set up your PayPal account.
If you want to send money to someone who’s not in your contact list, you can look them up by name, username, email address or mobile number in PayPal, or by name or username in Venmo. When you find the right person, enter the payment details, and the money will be delivered to their Venmo or PayPal account.
In-app and mobile purchases
You can use Venmo and PayPal to make in-app and mobile purchases at participating merchants. Just link your account and select Venmo or PayPal at checkout.
Online and in stores
In general, you can make purchases with Venmo through apps on mobile devices or mobile web browsers, but not from your desktop computer.
You can use Venmo to make purchases online and possibly in store. Some brick-and-mortar retailers accept Venmo, allowing you to make contactless payments by scanning the business’s QR code and entering the payment amount.
You also may be able to pay with Venmo at certain sites where PayPal is accepted. Click PayPal at checkout to find out whether Venmo is also accepted.
PayPal is widely accepted online and in person. To use PayPal online, choose PayPal as your payment method at checkout (if it’s an option). You can use PayPal’s OneTouch feature to stay logged in on your devices, so you don’t have to reenter your account information every time you want to make a purchase. To use PayPal for in-person purchases, scan the merchant’s QR code, enter the payment amount and tap “send.”
Venmo vs. PayPal: Receiving money
While Venmo and PayPal are useful for sending out payments, they can be equally helpful in collecting repayments from friends and family for everyday expenses. Here’s how you can use either app to get paid quickly and easily.
Friends and family
Receiving money is fast and easy, no matter which app you choose. If you have a Venmo account, you can send a payment request to friends and family through the app. When the money is sent to your account, you’ll receive a notification that the payment arrived, and it’ll be listed in green in your transaction history.
PayPal users can also send payment requests through the app. To make it even easier, you can create and share a clickable PayPal.me link or your QR code with friends and family. When the money is sent, you’ll get a message letting you know it’s available. If you don’t have a PayPal account set up, you’ll have to open a PayPal account and confirm your email address before you can accept the payment.
If you need to receive money from more than one person, you can add multiple recipients to a payment request in both apps. Or if you have a PayPal account, you can create a Money Pool page that allows multiple people to contribute money for a joint gift, rent payment, night out or other shared expense.
To accept payments for your business, you need to set up a business account with both PayPal and Venmo. Once you’ve completed Venmo’s sign-up process, clients can pay you with Venmo through the mobile app or in person with your business’s QR code.
With PayPal, customers can pay on your website, on mobile, in the app or by scanning your QR code in person. Or you can send them a clickable link. PayPal also offers additional business tools that Venmo doesn’t have, including customizable invoice templates, seller protection, marketing support and business financing options.
Fees: How Venmo and PayPal compare
If you’re sending money to someone in the United States using money from your Venmo or PayPal account or linked bank account, neither app charges a fee for domestic transactions. But if you’re using a credit card, or start accepting payments as a business, you could be subject to certain charges.
If you send money using a linked credit card, Venmo charges a 3% fee. And PayPal charges a fee of 2.9% plus 30 cents when you send money using a credit or debit card in the United States.
For international transactions, PayPal charges a fee of 5% if you make a payment using your PayPal balance, money from a linked bank account or Amex Send account (Amex Send is a peer-to-peer payment option offered by American Express in its app). If you make a credit or debit card payment, you’ll pay a fee of 7.9% plus a fixed amount, which varies based on where you live.
If you have a Venmo business account, you’ll be charged a fee of 1.9% of the payment amount plus 10 cents for each transaction. PayPal charges a merchant fee for commercial transactions. Fees range from 2% to 3% plus a fixed fee of 30 cents for transactions in the United States and 3% to 4.5% plus a fixed fee for transactions outside the United States (the fixed fee amounts depend on the country).
Bank transfer fees
If you’ve accumulated money in your Venmo or PayPal account, you can move it to your linked bank account for free. But it can take from one to three business days to complete the transfer.
If you need to move the money right away, both apps offer instant transfers. Both Venmo and PayPal charge an instant transfer fee of 1%, up to a maximum of $10. Venmo has a minimum fee of 25 cents.
PayPal vs. Venmo: Transaction limits and timing
PayPal’s transaction limits are higher than Venmo’s. If you haven’t completed your identity verification, Venmo limits all transactions to $299 a week. After your identity is verified, there’s a weekly spending limit of $6,999.99 across all transaction types.
Venmo also has a weekly maximum spending limit of $4,999.99 for person-to-person payments and $6,999.99 for authorized merchant payments. There’s also a per-transaction limit of $4,999.99 for person-to-person payments and $2,999.99 for merchant payments.
After your PayPal account is verified, there’s no limit on the amount of money you can send from your account, but you’ll be limited in terms of how much you can send in a single transaction: $60,000 generally, though PayPal may only allow up to $10,000 for a single transaction under certain circumstances.
Payments take just a few minutes to process when you use money in your Venmo or PayPal account or a linked credit or debit card to cover a transaction. Payments sent from a linked bank account may take longer because the bank must process it first.
Venmo and PayPal alternatives to consider
Both PayPal and Venmo offer convenient ways to send and receive money electronically from your phone. Gone are the days of rushing to an ATM to withdraw cash, hoping that you can get the right amount or that your friends may have exact change. But the apps have their differences: Venmo is geared toward quick, peer-to-peer transactions in the U.S., while PayPal caters beyond that to businesses and for international transactions.
If you’re not sure whether either app is right for you, here are some alternative payment methods to consider.
- Zelle: If you’re looking for an app that makes splitting the dinner bill or rent payment easy, Zelle may be a good option. Like Venmo, it’s designed to let people send payments to and receive payments from people they know. Unlike Venmo, the money isn’t held in a Zelle account. Instead, it moves between the sender’s and receiver’s bank accounts, so you don’t have to transfer money back and forth.
- Automatic bill pay: If you want to simplify the process of paying your bills every month, consider setting up recurring payments through a linked bank account.
- Mobile wallets: If you need a secure method to pay at your favorite online or brick-and-mortar stores or want a convenient way to accept payments for your business, mobile wallets like Google Pay (which you can use with an Android phone) or Apple Pay (compatible with Apple devices) might be worth a look. Unlike PayPal, Google Pay and Apple Pay don’t charge separate merchant fees.