venmo vs paypal

Venmo Vs Paypal: Everything You Need to Know

Electronic transfers are a popular medium among people to send and receive money. PayPal along with its subsidiary Venmo are the two most frequently used platforms to transfer money around. These two can be understood as payment systems that allow users to receive and send funds using an electronic platform. PayPal vs Venmo is a popular debate among users and there is a constant discussion to decide which of the two is a better platform. Both Venmo and PayPal are under the ownership of PayPal Holdings, Inc. Let’s see Venmo vs PayPal.

Among the several digital options available for users for transferring money to customers, employees, family, friends, etc, PayPal and Venmo are the two giants in this space and are most widely used by users. Both these digital wallets appear to be very similar but there is a world of a difference between Venmo and PayPal. Understanding this difference would help you choose which digital wallet is best suitable for your money transfer needs. Let us start with first understanding both these electronic wallets individually. 

What Is Venmo?

venmo vs paypal

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Venmo is a peer-to-peer payment app that is free for users. It allows you to receive and send money from your friends and contacts. The procedure of getting Venmo starts with using a phone number to set up an account to receive texts. Once your Venmo account is set, you then need to link a bank account, debit card, or credit card as a funding source for the account. Once this is done, you can use the linked account of your choice to transfer funds or request money from your friends and contacts. These funds will be transferred to your Venmo balance. 

Is Venmo a Safe Platform?

We can say that Venmo is a rather safe digital wallet as all the transactions here are encrypted for security purposes. However, just like users of any cash app, it is advisable to be cautious of your financial transactions and be well aware of whom you are transferring money to and for what purpose. Since Venmo is primarily designed to make financial transactions with friends and known contacts, if you need to transfer funds to an unknown person, it is advisable to use some other payment platform like a credit card or money order. 

How to Get Money Out of Venmo?

There are primarily two ways by which you can get your money out of the Venmo balance:

  • Make a bank transfer to any of your linked accounts.
  • You can withdraw money from the ATm using your Venmo card.

What Is Paypal?

venmo vs paypal

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PayPal has been in the market since the 1990s and first digital wallet apps and payment services on board. The app is popular not only for its eCommerce and online purchases but also for peer-to-peer money transfer facilities. You can use PayPal not only for money transfers with friends but with strangers as well. To use Paypal, you first need to set up an account with the help of your email address. This would function as your permanent ID. To make payments, you will have to register a bank account or a credit card with your PayPal account. 

Are Venmo and Paypal Same?

It is a fact that Venmo is owned by PayPal. However, the two digital wallets have independent operations and also have different goals. On the surface, PayPal has a much wider reach than Venmo and can be used to receive and send payments not only to peers but also to customers and merchants. 

Venmo and Paypal Comparison

venmo vs paypal

Source: gobankingrates.com

Let us now have a detailed look at the comparison of the two digital wallets to have a better understanding of their features, utility, and differences. 

Transactions Between Friends

While Paypal lets you send and receive payments from friends and strangers alike, Venmo is exclusively designed to make financial transactions with peers. Another difference is that PayPal allows you to make transactions using a web browser but Venmo has discontinued this feature. 

Venmo has a unique social aspect to it as well, which is not available at PayPal. Anyone who uses Venmo can see whom you have made a payment to, however, the amount paid can not be seen by others. So if you wish to have some fun here and exhibit your financial transactions with friends, you can opt for Venmo. 

You can split payments using both services. Paypal uniquely lets a group of individuals contribute money to a common cause using a pool. Additionally, Venmo lets you snake financial transactions within the US itself while you can use Paypal to send and receive money from over 200 countries worldwide. Another key difference between the two is that while Venmo offers only a debit card, PayPal offers them debit cards, credit cards as well as prepaid cards. 

Business Features

PayPal has clearly positioned itself as a payment platform for merchants.  It offers a huge variety of small business tools that come in very handy for merchants. These tools are completely absent from Venmo since it is a peer-to-peer transfer platform. Paypal not only offers merchants assistance in receiving payments, but it also helps them with product shipping, invoicing, and marketing insights. Some of these services are a part of the basic business package on PayPal, while other services are available on the PayPal Payment Pro account for a monthly charge. Paypal also has a provision for business loans and working capital up to $500,000. You can access a part of it without a credit check.

Paying Websites and Apps

When we talk of paid apps and websites, Paypal is omnipresent. On the other hand, Venmo is still trying to enter these spaces. PayPal has also recently taken a merchant QR code initiative to facilitate contact-free payments. 

FEE

Venmo and PayPal do not charge you any fee for receiving money from family and friends. You will not have to pay charges to send money for a bank transfer or using Venmo or PayPal balance. The difference in fees between the two platforms is in the credit card and debit card transactions. There is no fee charged on a debit card transaction on Venmo. If you use Paypal, you will have to pay $0.30 per transaction coupled with a 2.9% fee for credit card and debit card transactions.

Protection and Security

Every time you share your financial details with a third party over a mobile payment app, you expose yourself to a certain amount of risk. It has been seen that peer-to-peer payment platforms are often used for financial scams and if you fall prey to them, you can end up in serious legal issues. 

Additionally, since Venmo is designed to be exclusively used among peers, if you make an exception of using it with merchants, you would not get the kind of protection you would get while using a credit card. PayPal offers more protection and is designed to be used for commerce while Venmo is not. 

venmo vs paypal

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Transfer Limits

There is a difference in the transfer limits set on PayPal and Venmo. If the amount of money that moves through your digital account is huge, PayPal is a better choice for you. Unless you provide extended personal information to the app, there is a weekly transaction limit of $299.99 on Venmo. However, if you are a verified account holder at Paypal, there is no such limit for you but there might be a cap of $10,000 on a single transaction here. 

Privacy

PayPal is clearly more private than Venmo in certain ways. Venmo’s privacy policy is very tricky and is designed to allow the app to use your personal data and share it with third parties for Venmo’s own marketing purposes. On the other hand, Paypal’s privacy policy doesn’t have loopholes and clearly states that the app does not sell your data to third parties. They may only make use of this data within the company itself to provide service to customers. 

Also Read: How to Use PayPal on Amazon: Know it Today

Using Paypal Funds to Pay on Venmo

There is no provision to directly send your PayPal funds to Venmo. To do this, you will first have to transfer your funds from PayPal to a bank account that is linked to Venmo also, and then you can withdraw these funds from the Venmo account. 

Sending Money from Venmo to Your Paypal Account

There is no provision for sending funds directly from your Venmo account to a PayPal account. However, it is possible to make payments using your Venmo account with merchants who accept money from the PayPal app. All you nee3d to do is tap on the PayPal button on your mobile browser. If the concerned merchant has enabled the feature, it will use your Venmo account to take you to checkout. 

Paypal Vs Venmo: The Best App

Which digital wallet is best for you essentially depends on your scope of use of the same. If you wish to receive and send cash between close friends and family members, Venmo is your ideal option. This is because it has been specially curated to share funds with trusted people. However, if you need a more flexible option, you may want to go for Paypal. Paypal would allow you to send and receive money from individuals and businesses across countries. In either case, you would want to move with caution and vet people carefully before making financial transactions with them.

For more finance-related concepts you can have a look at the FinanceShed, and stay tuned for more updates.