You can do nearly everything from your mobile phone or computer nowadays, including sending or requesting money. Two of the most popular platforms for moving money around are PayPal and Venmo, which PayPal owns. Both are payment systems that let you electronically send and receive funds.
Both companies have made strides over the years to become more full-featured, even venturing into cryptocurrency. They 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 Venmo and PayPal nearly replace a bank account these days 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/transfer methods||Venmo funds, credit, debit card and bank transfers||PayPal funds, credit, debit card and bank transfers|
|Deposit methods||Bank transfer, direct deposit, check cashing||Check cashing, direct deposit, cash deposit at participating locations|
|Fees for sending money using bank transfer or your account balance||Free||Free|
|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||$299.99 weekly transaction limit until identity is confirmed, then $4,999.99 rolling limit||$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||
|Cash reload on card||Yes; rapid reloads incur a fee||Yes, for a fee|
|Security||Data encryption||Data encryption|
|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 payment ID. If you plan on making payments or sending money, you’ll need to register a credit 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. PayPal also lets you send money to individuals, but it has a wider reach and more latitude for paying for goods and services.
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?
Likewise, 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.
Venmo has its advantages, especially if you only occasionally send or receive small amounts to and from friends. PayPal is the more robust of the two, allowing you to send and receive money domestically and internationally to nearly anyone.
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
- Fraud monitoring
- Seller and buyer protections
Even with these security protections, users should still be on the lookout for scams. Some Venmo users have received a fraudulent text about an upcoming charge with instructions on how to cancel it, which asked the user to verify personal information. PayPal users have received similar phishing texts and emails from fraudsters.
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 $299.99 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 are available in three to five days. 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% fee (for a maximum of $10) for PayPal and 1.75% (25 cent minimum and $25 maximum) for Venmo to initiate this faster service.
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 49 cents 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.
Venmo vs. PayPal: Which Is Best?
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.
Information is accurate as of Sept. 19, 2022.
This article has been updated with additional reporting since its original publication.