Venmo Vs. PayPal: What Are The Key Differences?
While the world of digital payment services might pit Venmo against PayPal, in reality the applications are very similar and are indeed part of the same corporation. As we’ll see, however, there are some key differences that make each more attractive depending on the needs of the end user.
1. User Accessibility
Once a user has created an account, Venmo and PayPal are both accessible online or through a mobile device app using a desktop or laptop computer, tablet or mobile device. A key difference is that Venmo users can only make payments through the app, while PayPal can be used to make payment both online and through its app. Another difference is that Venmo is available for use only in the United States, while PayPal is established in more than 200 countries and 25 currencies.
2. Creating An Account
Since you will only be able to send payments through the Venmo app, you can sign up for the service by downloading the app on either an iOS or Android device. After creating a unique username and password and providing a phone number and email address, you will provide and verify the bank account, credit card, or debit card you will link up with Venmo.
For PayPal, you will provide the exact the same information as Venmo to set up the account. A distinction is that PayPal also allows you to set up a separate business account, for which you will have to provide the business’s Employer Identification Number (EIN) or your Social Security number.
3. Sending Money
The Venmo app is designed to be a fast and easy way for people to send money to other Venmo account holders. Imagine a friend is picking up takeout for you for lunch and you don’t have cash to reimburse them. Simply search for their Venmo account or scan the QR code on their app and send a payment. Initially, you can only send $299.99 to another user, but once that person is verified the limit is $4,999.99 weekly.
In addition to peer-to-peer payments, PayPal account holders can make online purchases from e-commerce sites that allow checkout with PayPal. Since PayPal is geared toward businesses, the transaction limit is $60,000 per purchase.
Both services allow touchless QR code purchases from participating retailers.
4. Requesting Money
The home page of the Venmo app has a Pay/Request button. Tap it and choose Pay or Request and the app will present a list of users you have already transacted with. If the person you are requesting payment from is not listed, you can search for them or simply ask them for their username. You can also scan the QR code on their app if they are present. You will not receive payment, however, until the person has seen your request and sent money. Their payment will land in your Venmo balance account, where it will stay unless you elect to transfer it elsewhere. To transfer, you’ll choose either “Instant” for a 1.75% fee, or “1 – 3 business days,” for free, then select your preferred bank account or debit card and select “Transfer.”
To request payment on PayPal, open the app and choose “Request.” You will enter a dollar amount and then search for the PayPal contact you are transacting with, then tap “Request Now.” You can also request payment online by logging into your account on PayPal.com. Click the “Request Payment” tab and enter the person’s email address and the amount you’re requesting. You will receive payment once the person has seen your request and sent money. Funds will stay in your PayPal balance account, but you can transfer them to a linked bank account or credit card for free in a few days or instantly for a 1.75% fee.
5. Transaction And Withdrawal Fees
When comparing Venmo vs. PayPal fees, note that the two services, while structured similarly, are designed to accomplish different things.
Venmo fees
- No fee for sending money from a linked bank account, debit card or Venmo Balance
- 3% fee for sending money from a credit card
- 1.75% fee for instant transfer to a linked bank account; no fee for standard transfer (1 – 3 business days)
- $2.50 ATM Domestic Withdrawal fee for debit card and $3 over-the-counter fee at financial institutions
PayPal fees
- No fee for sending money from a linked bank account or PayPal balance
- 2.9% fee for sending money from a debit card or credit card, plus a fixed fee for certain currencies if applicable
- 5% fee for sending money internationally, plus any applicable fees for using a debit or credit card
- $2.50 ATM Domestic Withdrawal fee for debit card and $3 over the counter fee for withdrawal at financial institutions
Business Features
While Venmo is geared more to person-to-person interactions, it does now allow online sellers to create a business profile. The seller is charged 1.9% fee for each transaction exceeding $1.
As a global online commerce payment service in more than 200 countries, PayPal has a much more sophisticated Commerce Platform with a fraud protection system covering both buyers and sellers. Aside from accepting multiple payment options, PayPal also integrates with point-of-sale and invoicing systems, subscription services, and all major financial management systems used by business. Businesses can set up a PayPal business account for free, but will be charged 1.9% to 3.5% for each sale depending on the type of transaction.
