You may send and receive money instantly with the aid of several peer-to-peer payment systems and mobile payment apps. Two of the most widely used apps available are Venmo and PayPal, with which you may be most familiar. Understanding how these two services operate and the benefits and drawbacks of each will help you make an informed decision.
What is Venmo?
Venmo is a digital payment system that makes it simple and safe to send and receive money. Venmo’s social features are well known. According to the firm, users may add notes and emojis to their payments to make “settling up feel like catching up.”
From being a social payment software, Venmo has developed into a one-stop shop where customers and companies can send and receive money, make transactions, and even purchase cryptocurrencies. 2009 saw the introduction of Venmo, which PayPal acquired in 2013. There are presently more than 83 million users of Venmo.
How does Venmo work?
To transfer or receive money, you can use Venmo to link your credit card, debit card, or external bank account to the app. You can use the Venmo app to divide the cost of brunch or to transfer your portion of the rent for free.
Similar to a virtual bank account, Venmo lets you build up balances that you can use for transactions and purchases. Payrolls can be directly deposited into your Venmo account, allowing you to get your money up to two days early.
Only if you fund your Venmo account with a direct deposit, mobile deposit, or bitcoin purchase is your balance covered by FDIC pass-through insurance. Sending and receiving money from your linked bank account or Venmo account balance is free.
Furthermore, the weekly amounts you can spend, send, and withdraw from Venmo are limited; these amounts can be increased by confirming your account. You can send and receive up to $60,000 weekly, spend up to $7,000 on products, and transfer up to $19,999.99 ($5,000 per transaction) to your bank with a verified personal account.
You can send up to $25,000 and transfer up to $49,999.99 per week to a linked bank account with a verified business account. Limits on each transaction could also be relevant. Venmo is a great option for customers and small businesses because of its comparatively low weekly transfer limits.
How to Set Up a Venmo Account
This is a step-by-step guide to setting up a Venmo account.
For individual use only:
- Visit the Venmo website or download the Venmo mobile app, which is compatible with iOS and Android.
- Launch the Venmo app or go to the Venmo website and choose “Get Venmo.”
- Upon registering, please accept the terms and conditions and provide your email address or Facebook account. (Mobile users will see this step first; desktop users will see the steps below for phone number verification to be completed first.)
- Enter your phone number to get a code for verification.
- On the app or website, enter the confirmation code and hit submit.
- To start sending and receiving money, add your bank account.
For business use:
- Open the Venmo mobile app after downloading it, or visit the Venmo website and select “Get Venmo.”
- To open a personal Venmo account, simply follow the instructions above.
- Click the “Create a business profile” button after creating your own Venmo account.
- Select if you are a registered business (LLC, partnership, corporation, etc.) or an individual (single proprietor).
- Add your username, business name, and a brief description of your enterprise.
- Enter your contact information.
- After previewing your profile, hit publish.
Pros
- Simple and rapid money transfers and online shopping
- Few fees unless, in your capacity as a small business owner, you conduct specific types of transactions or accept money.
- Engaging social media elements and vibrant emoticons
- Debit and credit cards that are optional
Cons
- Exclusive to the United States.
- Weekly spending cap of $7,000 for goods and services, including Venmo Mastercard debit transactions and merchant payments
- Not as commonly accepted by companies as other payment methods like cash, credit cards, or debit cards.
- Cost of 1.75% (minimum of $0.25 and maximum of $25) for immediate funds transfers to your debit card or external bank account
- Users of the app can find it challenging to browse the privacy settings—transactions might be publicly exposed.
What is PayPal?
Since the late 1990s, PayPal, a financial technology business, has provided a dependable online means of sending and receiving money. These days, PayPal is a massive player in the payment processing industry, controlling several businesses including Venmo, Honey, Xoom, and Zettle. PayPal links 429 million users across more than 200 markets globally, but Venmo is exclusive to the United States.
PayPal is a quick and safe way to send and receive money, as well as send money to friends and family, much like Venmo. However, Venmo is more focused on personal transactions, whereas PayPal is more geared toward business transactions, or payments for goods and services.
For buyers and sellers using its platform, PayPal provides fraud prevention, round-the-clock account monitoring, and additional security measures. You are eligible for a refund if you use your PayPal account to purchase an item and it arrives damaged. Similar to Venmo, PayPal enables customers to purchase and sell cryptocurrencies straight through the website.
How does PayPal work?
PayPal enables you to link a credit card, debit card, or external bank account. PayPal allows you to save a balance and utilize it just like a bank account for sending and receiving money.
You can still make purchases even if you don’t have a PayPal account, but one-time payments are only allowed up to $4,000. Up to $60,000 can be sent by verified PayPal customers, while there may be a lower transaction limit. To facilitate the sharing of your account with friends and family, you can generate a personalized PayPal.Me link.
Furthermore, PayPal provides businesses with a range of advantages, including loans, payment options, and the capacity to transact in 25 different currencies. Similar to Venmo, you may make in-person payments at participating retailers using the PayPal app. Compared to Venmo, PayPal provides more alternatives if you need to take payments from clients.
How to Set Up a PayPal Account
To create a PayPal account, just follow the steps listed below.
For individual use only:
- Choose “Sign up” after visiting the PayPal website or downloading the PayPal app.
- Go to Personal Account.
- Put in your password and email address.
- Enter your name, phone number, and address.
- Connect your bank account, debit card, and credit card.
For business use:
- Choose “Sign up” after visiting PayPal.com or downloading the PayPal app.
- To open a business account, select it.
- After creating a password, enter your email address.
- Enter the name of your company and your contact information.
- After reading the terms of service, click “Create account.”
Pros
- Endorsed by millions of retailers
- Accepted in more than 200 countries, it allows international money transfers in 25 different currencies.
- Sturdy business tools provide dependable means to be paid and facilitate customer payments.
Cons
- Compared to Venmo, PayPal’s fee schedule is more intricate.
- For a quick money transfer to an external bank or debit card, there is a 1.75% cost.
- The Venmo user experience is simpler than this one.
Differences between PayPal and Venmo
| Feature | PayPal | Venmo |
| Platforms | Web, smartphone, online shopping checkout, in-store checkout | Free from a bank account or debit card; 3% if paid with a credit card |
| Payment methods | Bank account, debit card, credit card, PayPal balance | Bank account, debit card, credit card, Venmo balance |
| Fees on payments | Free from a bank account; 2.9% plus a fixed fee if paid with a debit or credit card | Free from a bank account or debit card; 3% if paid with a credit card |
| Bank transfers fees & speed | Free for 3- to 5-day transfers; 1.75% for instant transfers (25 cents min, $25 max) | Free for 1- to 3-day transfers; 1.75% for instant transfers (25 cents min, $25 max) |
| Limits | Up to $60,000, including $10,000 in a single transaction | $6,999.99 for all transactions during the last 7 days* |
| Geographic reach | Can be used in more than 200 countries, with 25 currencies | U.S. users only |
| Best for | Online shoppers, small business owners, those who sell/buy internationally | Making payments to people you personally know |
Are Venmo or PayPal Secure?
Standard security protections are provided by Venmo and PayPal to protect your information. Encryption, two-factor authentication for your account, and customer care to help you in case of an issue are all features of the services that safeguard every transaction.
Why do people still use PayPal?
People use PayPal because it provides standard security protections to protect your information. Encryption, two-factor authentication for your account, and customer care to help you in case of an issue are all features of the services that safeguard every transaction.
Are Venmo and PayPal the same company?
The well-known payment app Venmo, is currently a part of PayPal. Typically, Venmo users send money to friends via the app, saving them the trouble of physically exchanging cash or cheques. Even though PayPal now offers a greater range of payment-related services, Venmo remains primarily a peer-to-peer payment software.
Will PayPal refund money if I am scammed?
Let PayPal know within 60 days if you are charged for a transaction that you did not make, and we will take care of the matter. Purchase protection includes payments made through our website and any qualifying purchases made with PayPal.
Zelle vs. PayPal vs. Venmo
| PayPal | Venmo | Zelle | |
| Purpose | Business payments | Social P2P payments | P2P payments backed by banks |
| Fees | 2.9%+$0.30 | 0% | 0% |
| Limits | No limit (with verification) | $2999/week(with verification) | $500/week (varies by bank) |
| Mobile App | Yes | Yes | Yes |
Who wins?
Venmo is the winner!
- It is supported by PayPal, which is a significant factor even though it is not backed by banks.
- The application is a tried-and-true tool with an excellent, user-friendly interface.
- The social component of the software has given money management a whole new meaning, even though downloading and configuring it is a one-time headache.
- Peer-to-peer payments are made a little more enjoyable by their interesting interface.
- Requesting or making a payment is an easy and quick process.
How does Venmo work when someone pays you?
The payer will either use your email address, phone number, QR code, or Venmo username to send you money. Before the money enters your Venmo account, you must accept it when it is released. Until you move the funds to your bank account or use the remaining amount for future purchases, they will stay in your Venmo account.
When someone sends you money on Venmo, do you have to accept it?
No, you are under no obligation to accept money sent to you via Venmo. After three days, the money will be returned to the sender if you do nothing. This also applies if you attempt to send someone money and they decline it.
Can everyone see who you send money to on Venmo?
Depending on your privacy settings, that is. You can choose to make your transaction activity on Venmo private (only you and the recipient can see it), friends only, or public (everyone can see it). Note that public is the default option.
PayPal Alternative: 11+ Best PayPal Alternatives 2023
HOW DOES PAYPAL MAKE MONEY: Business Models & History
How to Verify a PayPal Account: Step-By-Step Guide
References:
