Both PayPal and Venmo are digital payment methods that are mostly used as smartphone apps. The process of making a payment with Venmo or PayPal is similar to writing a check in that both take funds from associated bank accounts. However, there are two contemporary changes.
First, the user has a choice as to where the money will be deducted when sending payment via Venmo or PayPal. Options include the user’s main checking account, a secondary savings account, a debit card, or a credit card. In contrast to checks, which must be cashed and may bounce due to insufficient funds, the transfer of funds occurs practically instantly.
Since it was founded in the late 1990s and quickly became the payment method that enabled millions of eBay transactions, PayPal is the industry pioneer in this regard. Contrarily, though it’s a hit, Venmo is a newcomer to the scene. Venmo was founded in 2009 and was later purchased by PayPal and Braintree three years later, in 2012.
How Do PayPal and Venmo Work?
Both services share the same fundamental setup and operation. You establish your security credentials by signing up for a free account with the service. Then you link at least one bank account for transfers and can optionally add more payment options, such as debit and credit cards or other bank accounts.
When you’re ready to pay someone, simply enter or look up their contact information, input the payment amount, and select the payment method you want to use. In contrast to PayPal, which lacks a “request” button but still permits you to receive money, Venmo has a button that allows you to request money rather than send it.
While individuals choosing to use a debit or credit card will see the payment amount added to their statement like you would for any other purchase, PayPal and Venmo fund your payments by establishing ACH transfers to and from your associated bank account.
Who Should Use PayPal or Venmo?
Venmo is the best option for people making mostly private payments to people they know and trust. Making payments with Venmo and viewing exchanges among your contacts feels friendly and personable thanks to its social interface.
You can pay your friends and family with PayPal as well. Whichever platform more of your contacts use will determine which one is best for you.
A PayPal account will be much more useful for you if you sell goods or frequently pay for online purchases. Venmo is still a young service even though it has started to set up a Venmo Business account.
However, PayPal has been assisting merchants and small businesses since 1998, and it provides the most comprehensive selection of merchant support for any digital payment app.
Sending Money: Venmo vs. PayPal
Both apps have a somewhat similar method for sending money to someone. Both allow you to link your contacts with the app so that it may look for any friends and family members who have connected PayPal or Venmo accounts. You can still send money to someone even if the app doesn’t uncover the person you’re looking for by using their username, email address, or mobile number.
Both PayPal and Venmo will ask you what payment method you’d like to use once you select the recipient and the amount. You can use those cash to make your payment if you have a positive balance with either service. If not, money will be deducted from the bank account, debit card, or credit card you specify as your preferred mode of payment for this transaction.
Within a few minutes, frequently in just a few seconds after you hit “send,” the money will appear in the recipient’s Venmo or PayPal balance. With both apps, you should double check that you’re sending money to the correct recipient because the companies won’t reimburse you if you send it to the incorrect recipient.
There are plenty of digital options available to you if you need to send someone money or accept payment from them. However, PayPal and Venmo are the two market leaders, to the point where each is now frequently used as a verb, as in “PayPal me” or “Venmo me.”
The types of transactions you want to conduct and the parties you want to exchange money with heavily influence how you should choose one over the other. For instance, personal transactions with people you know, like paying your babysitter or splitting the bill at a restaurant with friends, are especially well-suited to Venmo, where you can also make your payments more social.
The most popular option is PayPal for transactions that are more focused on purchases, like making purchases from retailers or taking payments from your own clients. Venmo and PayPal are two platforms for business payments that are more focused on peer-to-peer (P2P) transactions than on business-to-consumer (B2C) transactions (B2C).
The two payment services do, however, have a good deal of overlap. We’ve examined the specifics of features, costs, speed, and versatility to help you make an informed decision. We’ve provided you with all the information you need to do so.
PayPal vs. Venmo: Accessibility
The majority of consumers will go to their respective free applications for iOS and Android to use PayPal and Venmo. Each of them also has a desktop version that runs in a browser. PayPal payments can be initiated with the mobile app, however, payments made with Venmo cannot be initiated on the website.
PayPal may be used to make in-store QR code transactions and is accepted as payment by a number of different online merchants.
Venmo is aiming to expand this merchant transaction capability among additional retailers, but in comparison to PayPal’s incredibly wide footprint, its reach is currently quite constrained.
PayPal vs. Venmo: Limitations
Customers wishing to send very large transfers have a huge advantage thanks to PayPal. In most cases, single payments are allowed up to $10,000 each, with a cap of $60,000. That greatly surpasses the rolling seven-day Venmo cap of $6,999.99. Venmo does identity verification before allowing access to these constraints in addition to having less restrictions and identity verification. Up until then, the maximum transaction value is $299.98.
Reviews of PayPal versus Venmo
Similar positive third-party user reviews are found for the PayPal and Venmo apps. Reviewers praise their simplicity of use, aesthetic appeal, and ability to send money and requests with only a few simple clicks.
