Venmo vs. PayPal
Send money securely with the two most popular money apps
Venmo and PayPal are two of the most popular payment platforms that can be used to send and receive money to and from friends or customers. PayPal was founded in 1998 as an electronic payment system tailored specifically to online commerce. Venmo was developed 11 years later to make it easy for everyday users to send money to each other via text or a mobile device.
Although there are many similarities between the two (PayPal owns Venmo), there are also important differences that sometimes make one better than the other. We reviewed both platforms based on cost and fees, ease of use, transaction limits, ratings, where each can be used, and more.
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||Up to $60,000 (limited to $10,000 in a single transaction)|
|Withdrawal Timeframe||1-3 business day||3-5 business days|
|Fee||Free to use||Free to use|
|Best for||Everyday users (P2P)||Businesses (merchants)|
|Availability||U.S. only||200 countries|
* Venmo only lets users make payments using its mobile app
Accessibility: Venmo vs. PayPal
Both Venmo and PayPal can be accessed using a desktop or mobile browser or their native apps. While PayPal allows users to make payments both online and via its app, Venmo payments can only be made through the Venmo app.
Payments: Venmo vs. PayPal
Both Venmo and PayPal allow users to send money using their account balance or through connected credit cards and bank accounts.
Previously, only a few businesses accepted payments directly through Venmo, including Uber, Grubhub, Forever 21, J. Crew, and Poshmark. However, the company recently began allowing retailers to offer customers touchless Venmo payments using in-store QR codes starting with CVS. PayPal already supports touchless QR pay with its retail partners.
PayPal is used by online merchants and many e-commerce sites that allow shoppers to make purchases with their PayPal account. Because PayPal is tailored for business use, it has a high transaction limit of $10,000.
PayPal users can activate PayPal’s One Touch feature, which lets them enter their PayPal information once and shop from participating merchants with one click without having to sign in to their account every time. One Touch works on both desktop and mobile devices. Shoppers can also pay directly with the PayPal app by scanning eligible QR codes.
Sending Money: Venmo vs. PayPal
Venmo’s app is specifically designed to make sending money to other Venmo users fast and easy. The app can automatically find the Venmo accounts of family and friends by connecting to a user’s Facebook account and phone contacts. Money can be sent to another user by searching for their account or by scanning the QR code on their app. Users can also see purchases their friends share publicly with a social-style news feed, send a message with a payment, and “heart” a friend’s purchase.
PayPal also offers some pretty impressive features for sending money. Rather than sending someone an email address for payment, PayPal lets users create a PayPal.Me link that they can share instead.
Users with a PayPal Cash or PayPal Cash Plus account can also create a Money Pool page where friends and family can chip in for a common cause. Funds get sent to the PayPal account of the person who set up the pool and can be accessed immediately. Although there is no fee for friends in the U.S. who chip in using their linked bank account or PayPal balance, PayPal charges 2.9% per transaction if they use a credit card, debit card, or PayPal Credit.
PayPal also lets users send money to someone’s bank account or cash pickup location in over 130 countries with its Xoom service, even if they don’t have a PayPal account. Fees vary by country and deposit or withdrawal type, charging users anywhere from $4.99 to $30.49 for a single transaction.
Venmo’s initial person-to-person sending limit is $299.99. Once a user is verified, that increases to a weekly rolling limit of $4,999.99. PayPal requires all users to be verified and allows users to send up to $60,000, but may limit the amount to $10,000 in a single transaction.
Depositing Checks: Venmo vs. PayPal
Recently, Venmo rolled out a new Cash a Check feature that lets users deposit a check into their Venmo account by taking a picture of it with the Venmo app. If a check is approved, the deposited funds are available within minutes. Not all users are eligible for this feature, so users will need to sign into their Venmo app to see if it’s available.
PayPal also allows users to deposit checks into their PayPal account using its app, but they will need to sign up for PayPal Cash Plus first. 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).
Business Features: Venmo vs. PayPal
As mentioned earlier, Venmo is just starting to become more merchant-friendly. Online sellers can create a business profile allowing users to pay them as they would a friend, and retails can also make in-store pay easy with QR codes that can be scanned by the app.
Because PayPal is primarily geared toward merchants, it offers more features for business than Venmo. PayPal’s Commerce Platform lets businesses accept a variety of payment types and options, including point-of-sale (POS) systems, virtual terminals, subscriptions, billing agreements, and invoicing. PayPal supports over 100 currencies in more than 200 countries.
PayPal offers fraud and seller protection to protect businesses from chargebacks, reversals, and fees using advanced machine learning to identify new fraud risks.
PayPal Buyer Protection
- 24/7 monitoring
- Fraud prevention
- Full refund if the order never arrives
- Full refund if the buyer receives the wrong item
- Full refund if the item is damaged during shipping
- Full refund if the buyer receives a counterfeit version of the item
PayPal Seller Protection
- 24/7 monitoring
- Merchant fraud prevention
- No chargeback for “Item Not Received” claim with proof of delivery/shipment
- No chargeback for “Unauthorized Transaction” claim with proof of delivery/shipment
Additional Features: Venmo vs. PayPal
PayPal has several additional features through its service. For instance, it offers fixed-fee working capital and term business loans based on a merchant’s PayPal history. Loans require no credit check and can be repaid with a percentage of PayPal sales for working capital loans or through automatic weekly payments for term business loans.
PayPal working capital loans provide financing up to 35% of a business’s annual PayPal sales. Once approved, loans are funded within minutes. PayPal charges a single fixed fee based on sales volume, account history, the loan amount, and the percentage of sales the business directs toward repayment (10% to 30%). Payments are automatically deducted from a business’s PayPal account until the loan is repaid.
PayPal also offers business loans between $5,000 to $500,000 based on the financial strength of a business and its credit score. PayPal charges a fixed fee and withdraws repayments weekly from the business’s bank account instead of a PayPal account. Loans are funded within 24 hours and are repaid over 13 to 52 weeks depending on the amount.
PayPal offers cash-back and points-based credit cards, as well as a digital line of credit wherever PayPal is accepted. Although Venmo can’t compete in this arena, it does offer a physical card that extends Venmo’s purchasing power to just about any merchant. The card can be used to split payments between friends and also earns cashback rewards. Individuals who set up direct paycheck deposits to their Venmo account can also access their money two days earlier using the Venmo card.
Recently, PayPal has entered the cryptocurrency marketplace. Users can buy, hold, and sell Bitcoin, Ethereum, Litecoin, and Bitcoin Cash with a PayPal or Cash or Cash Plus account. PayPal lets customers start with as little as $1 and offers several useful resources to educate them about buying and selling cryptocurrency.
Cost: Venmo vs. PayPal
There is no cost to create either a Venmo or PayPal account. Each also offers free iOS and Android mobile apps. PayPal allows users to create an account using an email while Venmo requires a mobile phone number.
PayPal charges 2.9% of each transaction plus $0.30 for purchases made with a credit or debit card. Venmo charges 3% per transaction for purchases made with a credit card and no fee for debit card purchases.
Although neither service charges to transfer money to a connected bank account with a standard turnaround (one to three business days for Venmo and one to two business days for PayPal), Both services charge a 1% fee with a maximum of $10 for an instant transfer.
Designed for quick money transfers
No fee for debit card purchases
Cash a Check feature
Only available in the U.S.
Low initial person-to-person sending limit
Not widely accepted by retailers
Available in 200 countries
High transfer limit
Fraud and seller protection
High transaction fees
PayPal Cash Plus account required to cash a check
Charges for debit card purchases
What Are Venmo and PayPal?
Venmo and PayPal are digital wallet services that let users make electronic purchases by securely storing payment information and passwords for multiple payment methods. Both allow users to connect their accounts to multiple bank accounts or credit cards.
While both services make it easy to send money to other users, PayPal is more focused on acting as a payment gateway for online purchases. As mentioned earlier, PayPal also offers credit card and business financing options.
Although Venmo is slowly gaining traction as an online payment portal, its primary use is for sending money quickly between two users. It does this far more easily and faster than PayPal.
How Do Venmo and PayPal Work?
Venmo and PayPal process payments using either the existing balance in each account or by drawing on funds from connected bank accounts or credit cards. Both services can be accessed online or through mobile apps. PayPal lets users send or request payments on the web while Venmo only offers this function through its mobile app.
Who Should Use Venmo or PayPal?
PayPal is best for online merchants who want to offer additional payment options to their customers. It offers both buyer and fraud protection so businesses can be assured they’re protected.
Venmo is the easiest solution of the two for sending money between two people. However, because it doesn’t have buyer protection like PayPal, it might not be a great option to send money to people a buyer doesn't know.
How We Evaluated Venmo vs. PayPal
In comparing Venmo vs. PayPal, we looked first at the users each served. We also looked at what each charged, how easy the service was to use, what protections each offered, and how well each service was reviewed.
In general, although both services are owned by PayPal, PayPal is by far the more robust, secure, and safe option for processing online payments. For sending money quickly and easily to friends and family, however, Venmo is the better choice.