Venmo and PayPal may have started as a way to kick some money down to a friend or pay for some goods you won in an eBay auction, but they are now two of the most popular platforms for moving money. Both companies have made strides over the years to become more full-featured, even venturing into cryptocurrency. Today these payment platforms can basically replace a bank account with features such as mobile check deposits and a linked debit or credit card.
Venmo vs. PayPal: A Head-to-Head Comparison
Venmo and PayPal are both great tools when you need to send and receive money. GOBankingRates weighed their features to find how they differ:
|Payment and transfer methods||Venmo funds, credit, debit card and bank transfers||PayPal funds, credit, debit card, bank transfers and rewards balance|
|Deposit methods||Bank transfer, direct deposit, check cashing||Check cashing, direct deposit, cash deposit at participating locations and bank transfer|
|Availability||U.S.-only transactions||More than 200 countries around the world|
|Fees for sending money using bank transfer or your account balance||Free||Free|
|Card and payment options||-Venmo debit card
–Venmo credit card
-Linked debit card, credit card or bank account
|–Linked debit card, credit card or bank account
-PayPal Cashback Mastercard
-PayPal debit card
-Buy now, pay later via Pay in 4
-Check out with crypto
|Credit card transaction fees||3% fee||2.9% plus $0.30 per transaction|
|Debit card transaction fees||Free||2.9% plus $0.30 per transaction|
|Cryptocurrency||Buy, hold, sell bitcoin, ethereum, litecoin, bitcoin cash||Buy, hold, sell bitcoin, ethereum, litecoin, bitcoin cash|
|Transaction limits||$999.99 weekly transaction limit until identity is confirmed, then up to $19,999.99; transfers greater than $5,000 must be done through multiple transfers||$4,000 limit on one-time payment for those with no PayPal account; no limit on total sent for verified accounts, though single transactions might be capped at $10,000 to $60,000|
|Bank account transfer times||1-3 business days; instant transfer available for a fee||3-5 days; instant transfer available for a fee|
|ATM withdrawal fees|| -Free MoneyPass network withdrawals
-$2.50 for out-of-network withdrawals; $3 for over the counter withdrawals
|-Free MoneyPass network withdrawals
-$2.50 for international and out-of-network withdrawals; $3 for over the counter withdrawals
|Cash reload on card||Yes||Yes, for a fee of up to $4.95|
|Security||Data encryption, secure servers and PIN code||Data encryption, security key, key pinning and email confirmation|
|Best for||Money exchange between friends||Personal and business use|
How Do Venmo and PayPal Work?
Venmo is first and foremost a social peer-to-peer payment app that lets you send money to and receive money from friends, although it also supports in-app purchases and payments to businesses. You start by setting up an account using a phone number that receives texts. Once your account is set up, you’ll link a bank account, credit card or debit card as your funding source. You can then request money from friends or send funds by transferring cash from your choice of linked accounts or your Venmo balance.
PayPal is primarily a payment-processing platform, and it also lets you send money to and receive money from family and friends. You’ll need to set up an account using an email address, which will serve as your login ID. If you plan on making payments or sending money, you’ll need to link a credit card, debit card or bank account.
Is Venmo the Same as PayPal?
Although PayPal owns Venmo and the apps have overlapping functionality, the two payment services operate independently and have different missions. The main difference is whether or not you’re sharing money with someone you know.
Venmo is intended for sending and requesting money between friends — or to businesses you or your family and friends are connected with — and splitting bills for shared expenses. It even has a social feed that lets you share payments and interact with your connections.
Venmo vs. PayPal: How Their Features Compare
Here’s a closer look at how Venmo and PayPal measure up.
Both companies have strong security features, including data encryption. PayPal also offers fraud monitoring and protection plans for buyers and sellers.
Even with these security protections, users should still be on the lookout for scams. Some Venmo users have received a fraudulent call from someone saying they are from Venmo and need to verify the account. They may ask you to provide a verification code you received via text. PayPal users have received similar phishing texts and emails from fraudsters.
Business and Acceptance
Both companies offer users business and seller accounts, but PayPal is much more widely accepted than Venmo. PayPal is accepted in more than 200 countries worldwide, while Venmo is only available for U.S. transactions. PayPal also lets you send and accept foreign currencies, which gives small businesses the chance to expand their customer reach.
Venmo and PayPal have similar features, but the companies differ when it comes to transfer limits. If the amount of money that moves through your account is a big factor, PayPal might be the best choice. Venmo has a $999.99 weekly transaction limit unless you provide further personal information to confirm your identity. Verified PayPal account holders have no such transaction limits, although single transactions might be capped at as little as $10,000.
Again, PayPal and Venmo are similar when it comes to fees. Neither charges a fee for receiving money from friends and family. ATM withdrawals using your PayPal debit card or Venmo card are both $2.50 unless you use the free in-network cash machines. There’s no charge for sending money using your PayPal or Venmo balance or a bank transfer.
The difference lies in debit or credit card payments. Venmo debit card transactions are free, and it charges a flat-rate fee of 3% for credit card transactions. PayPal charges 30 cents per transaction plus a 2.9% fee for both debit and credit card transactions.
PayPal and Venmo are close when it comes to how long it takes to transfer money. Funds from Venmo transfers are available in one to three days, and funds from PayPal transfers can take as long as three to five days — although most are available within one business day. Both also offer instant transfers to an eligible debit card or bank account. The funds will arrive in 30 minutes or less, but you’ll have to pay a 1.75% fee, for a maximum of $25, to initiate this faster service with either company.
PayPal has more options for payment, including rewards balances, PayPal Credit and the Pay in 4 buy now, pay later plan. However, both platforms allow shoppers to use touchless QR pay in many stores and small businesses. Venmo is keeping up by expanding into contactless payments anywhere Mastercard is accepted. You can also use the Venmo debit card.
Good To Know
You can buy, sell or hold bitcoin, ethereum, litecoin or bitcoin cash using either Venmo or PayPal. Although there’s no fee for storing your coins, both platforms charge $0.49 to $2.49 or up to 1.80% of the transaction, depending on the transaction amount, when you buy or sell. Only PayPal lets you use your cryptocurrency to pay for purchases.
Account Set Up
Making an account with either of these services is very simple and can be done in just a few steps.
How To Set up a Venmo Account
If you are interested in making a Venmo account, you can do so through the app or directly on the website. You will need to provide your phone number and email address for account verification in addition to a secure password. Once you have verified your account by following the prompts, you can add and verify your bank account. From there, you are ready to use the service.
How To Set up a PayPal Account
Setting up a PayPal account can be done on the PayPal website, through the mobile app or while checking out on any online store that takes PayPal as a method of payment. You will need to provide a password and details such as your name, address, phone number and email address. After verifying your email, the final step in the setup process is to link your credit card, debit card or bank account.
Venmo vs. PayPal: Which Is Best for You?
If you’re looking for a simple service that lets you send and receive cash between family and friends every so often and you order the accompanying debit card for purchases, go with Venmo. It’s designed as a social money app for sharing funds with people you trust.
But if you’d like more flexibility, PayPal is best. You’ll have access to installment payment plans and be able to send money to and receive money from businesses and individuals in nearly any country, even if you don’t have a personal relationship with them. Just remember to vet people thoroughly and proceed with caution when sending money.
FAQHere are the answers to some of the most frequently asked questions regarding Venmo vs. PayPal.
- Is Venmo safe to use?
- All Venmo transactions are encrypted for security, but as with all cash apps, be cautious about who you're sending money to and why. Venmo is designed as a way for friends to send and receive money. If the person you're considering transferring funds to is someone you don't know well or trust, consider using an alternative method of payment like a money order or credit card.
- How do I get my money out of Venmo?
- There are a couple of ways to cash out your Venmo balance:
- -ATM withdrawal using the Venmo Card
- -Bank transfer to one of your linked accounts
- There are a couple of ways to cash out your Venmo balance:
- Can I deposit or cash a check with PayPal or Venmo?
- Select account holders can deposit a check using the Venmo or PayPal app by snapping a photo of the check. For PayPal, you'll need a Cash Plus account first. As for Venmo, they recently rolled out the service, but it's only available to select accounts.
- Can I use PayPal to pay on Venmo?
- You can't directly send PayPal funds to Venmo. Instead, you'll have to get creative and transfer PayPal funds to a bank account linked to Venmo and then withdraw the funds in the account from Venmo.
- Can I send money from Venmo to a PayPal account?
- You can't send money directly from Venmo to a PayPal account, but you can make payments using Venmo at participating merchants. Selecting that option takes you to checkout using your Venmo account to select the source of funds -- your Venmo balance or a linked account.
- What are the disadvantages of Venmo?
- The biggest disadvantage of Venmo is that it is limited to U.S. accounts only. PayPal, on the other hand, allows you to send and receive money domestically and internationally to nearly anyone.
- Why do people use Venmo instead of PayPal?
- Someone might use Venmo over PayPal if they are looking for a straightforward way to send and receive money from friends and family that will also offer an option for interaction. With Venmo’s social feed, you can interact with your connections and even send emojis.
Information is accurate as of April 11, 2023.
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