Venmo vs Paypal, which payment app do you use? Let’s talk about those two apps based on their fees, security, transfer limits, and how well they are for business.
Imagine you are having dinner outside with your buddies and you all need to pay. But things become awkward when it comes to asking for a billing split. It can be because your friends don’t have enough cash at the moment. Or, you don’t have any change.
With a digital wallet, you can avoid having such a situation. It will be easier for you to split the bills or payments. Even when you don’t have any cash or change with you.
Furthermore, a digital wallet lets you purchase goods and items effortlessly. Just scan the QR code provided in the shop and your payment will be done in a few seconds.
As a merchant, taking payments using a digital wallet is quite practical because the transactions are safe, simpler, and recorded.
In this post, we will compare about two digital wallets that most people use: Venmo vs Paypal. Here, you will learn which payment app:
- provides cheaper fee
- has better security
- has bigger transfer limits
- is best for business
Let’s get started!
What is Venmo?
Venmo is a digital wallet that is designed as a social payment to split bills or transfer money to friends or families in a safe and fast way.
You can connect your Venmo account with your debit card or a bank account for free. However, there will be some merchant fees if you use a credit card like Visa, MasterCard, Discover, or American Express.
The money in your Venmo balance will stay there until you use it to purchase something, send it to other people, or transfer it to your bank account. And there is no monthly or annual cost for using Venmo.
Venmo also has a social timeline feature that allows you to see other people’s transactions. For example, Maria paid James $10 and there will be a description of what the payment is for.
By default, it’s set to public view. However, if you don’t like this feature, you can change it to private. So, it’s only the sender and the receiver who know about the transactions.
Some apps like Uber Eats, StockX, Grubhub, and Zola support Venmo as their payment method.
What is PayPal?
PayPal is a digital wallet that you can use to send and receive money from friends or other people in a simple and secure way. It works pretty much like Venmo but in a better version.
PayPal has been around since the beginning of online transactions. It has several companies and Venmo is one of them. It is also the only payment method accepted on eBay which handles transactions from all over the world.
PayPal has got a long track record, a great history, and a really strong encryption system to keep your transaction safe. It doesn’t share financial information with the sender or the receiver.
This digital wallet has website purchase protection for both buyers and sellers. It allows a buyer or seller to log a dispute about the transaction. Also, PayPal has an excellent conflict resolution system. They track what goes on between the buyer and the seller through an online platform where they’re seeing all the transactions and even sometimes some comments.
In addition, PayPal is available in over 200 countries and it supports 26 different currencies.
Venmo vs PayPal: Which Digital Wallet is Better in 2021?
Venmo vs PayPal Fees
One of the aspects that make people decide to choose one payment app over another is the fees. Most people will choose the payment app that offers less cost or even no cost for the services. And it’s pretty normal.
In this part, let’s talk about the battle of Venmo vs PayPal fees.
Basically, everyone can create either Venmo or PayPal account for free. To do this, you will need to insert your phone number and email address. Both Venmo and PayPal work as your digital wallet which you can use to send and receive money. You can use them anytime anywhere. No monthly fees will be charged to you.
Venmo and PayPal let you send and receive money to your friends or family for free with your balance or bank account. However, there is a fee for sending money using your credit card via Venmo and PayPal. Venmo will charge you 3% per transaction when you do so. While PayPal will cost 2.9% + $0.30 for each credit or debit card payment.
The rule doesn’t apply if you send money to your friends or family using your Venmo balance, debit card, or bank account. However, PayPal costs 2.9% + $0.30 to receive money for goods and services.
It is possible for you to deposit payroll or government checks directly to your Venmo account. But, this service is not free. Venmo will also charge you 1.00%, with a minimum fee of $5. And you will need a pre-printed signature for it. On the other hand, adding money from non-payroll or non-government checks will cost a 5% fee with a minimum fee of $5.
If you use Venmo for business account, there is a 1.9% + $0.10 fee when you receive money from Venmo users.
In this Venmo vs PayPal fee battle, as a merchant, Venmo charge you less money than PayPal. But, your customers is limited to pay using dollar only. You may think of using PayPal if you are accepting other currencies than dollar.
Venmo vs Paypal Transfer limit and speed
Venmo offers an effortless and fast way to send and receive money from friends and family. Once you connect it with your phone contacts or Facebook contact, you will be able to find those who use Venmo. Transferring money becomes as easy as sending a text to a friend.
Venmo has a transfer limit for person-to-person payments. Unverified accounts will be limited to send up to $299.99 per week. To increase your transferring limit, you have to verify your identity. As a verified Venmo user, your maximum weekly peer-to-peer spending will be increased up to $4,999.99 per transaction. And the payment to the authorized merchant will be limited to $2,999.99 per transaction. So, overall combined, your Venmo account has a transfer limit of $6,999.99 per week.
Similarly, PayPal lets you send payments to anyone with an email address or a phone number. Or, you can also create a PayPal.Me link and share it with those who want to send you the money. If you are a verified user, there is no limit on the total amount of money you can send from your balance. PayPal allows you to transfer up to $60,000, but it is limited to $10,000 for each transaction.
Interestingly, both Venmo and PayPal also support QR codes that make it easy and fast to pay. To pay or send money, you only need to scan the QR code using the camera on your phone. And the money will be added to your balance within seconds.
This method is very useful for everyone who prefers cashless.
PayPal has an instant transfer that lets you send money from your PayPal balance to an eligible bank account within minutes. Transferring money to a debit card is also possible, but it takes 1-3 days to process.
There are some limits that you should know when using PayPal instant transfer to send money to a debit card or bank account. For the debit card, you are limited up to $5,000 per transaction, $5,000 per day, and $5,000 per week in total. And in a month, it’s limited up to $15,000. On the other hand, if you transfer to a bank account, the PayPal transfer limit will be up to $25,000 per transaction.
In contrast, Venmo offers fewer limits to the amount of money that you can transfer to a bank account. Unverified users can only send up to $999.99 per week. To increase the limit, you must be a verified user. Then, you will be able to transfer up to $19,999,99/week and $2,999.99 per transaction. However, bank transfer will take 1-3 business days.
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Security: Venmo vs PayPal
As a digital wallet, it is important to provide the best security to keep the money and account information safe. Hence, in this section, let’s take a look at the Venmo vs PayPal security battle.
Both PayPal and Venmo use encryption to protect your account information. They also use real-time transaction monitoring for your account activities. These are done to avoid any fraudulent payments.
For extra safety, PayPal uses TLS and HTTPS for secure connections. It also uses PCI compliance to keep the customers’ information protected. It means PayPal will never expose the Visa cardholder information. Hence, PayPal is safe for your business.
Venmo offers interesting security to protect your account if you have lost your phone. To prevent your account from being used in an unauthorized way, you can sign out of your Venmo mobile app from the website. Navigate to Venmo.com > Settings > Security and remove the session linked with your phone.
However, a study in 2018 reported that Venmo had a security breach issue. It is said that hackers were able to transfer up to $3,000 to a new bank account from a user’s Venmo balance.
That said, in Venmo vs PayPal security battle, PayPal comes as the winner.
Business: Venmo vs Paypal
PayPal has a very well-established and slick business finance platform. It has a much better dispute and conflict resolution process than Venmo.
PayPal accepts over 100 currencies in over 200 countries. It appears that PayPal will be your best choice if you are planning to expand your business globally.
Besides, it offers fraud prevention for both seller and buyer. Buyers will receive a full refund if they get the wrong item, the item doesn’t arrive, or is damaged during the shipping. And the buyer will not get chargeback for unreceived items and unauthorized transaction claims with shipment delivery proof.
Moreover, PayPal has been in this industry longer than Venmo which shows how solid it is.
Recently, Venmo for business is introduced. This lets merchants include Venmo as an alternative payment. Venmo offers a 30-day trial before charging the merchants for each payment they get. The seller will be charged 1.9%+$0.10 of the payment. And the currency is limited to the dollar only.
The downside of Venmo for business is the inherent uncertainty it causes by not being connected to their business invoicing or bookkeeping tools. Thus, unlike an invoice from Quickbooks or a deposit from Stripe, a Venmo payment is likely to end up in your bank account with a dollar sum and no other information.
This puts a lot of responsibility on you as the owner to ensure that you’re linking things correctly and as owners, we’re not keeping up with our bookkeeping. That can lead to a lot of confusion at the end of the year when you’re trying to reconcile everything.
So, accountants don’t like Venmo for business because there’s not a whole lot of linking between the invoice or the customer and the payment.
For the bottom line of Venmo vs PayPal for business, if you choose to use Venmo for business, just make sure that you are staying on top of your bookkeeping. It will make your job easier for yourself at the end of the year. But if you accept different currencies, PayPal is a better choice.
Wrap Up Venmo vs PayPal: Which Digital Wallet is Better in 2021?
Venmo is the best transfer method for you to transfer peer-to-peer. Peer-to-peer is more common than peer to business. This is why it is an easy way you know to send money to another person or get money from reimbursement wherever it needs to go.
You can also use it as a bank account replacement because there is no monthly and annual fee. Also, it doesn’t have minimum credit to use it.
The downside is that Venmo is only available in the US only. And the payment can be done via mobile app.
Compared to Venmo, PayPal is the leader in this online payment industry and one of forefront leaders and with eBay. It is available in more than 200 countries and states and supports 26 currencies. You can purchase or transfer money both from mobile app and website.
It is one of the oldest platforms of payment. Plus, its security is amazing. It won’t reveal any financial information like credit cards to the buyers or sellers. It has website protection to protect both buyers and sellers from each other essentially. For instance, the buyers will not give the money to the sellers who give fake products. They have a great conflict resolution system.
So, it is the best decision to use PayPal for your business than Venmo. It has gone through the thick and thin of e-commerce. It’s very safe for transactions. PayPal has got everything encrypted, your information is protected, and got your back should anything go wrong.
That’s all about Venmo vs PayPal comparison battle. Do you use one of those payment methods? Which payment method that you think is best for you?
Is there anything that we missed? Write down your thoughts about Venmo vs PayPal in the comments box below.