'ZDNET Recommends': What exactly does it mean?
ZDNET's recommendations are based on many hours of testing, research, and comparison shopping. We gather data from the best available sources, including vendor and retailer listings as well as other relevant and independent reviews sites. And we pore over customer reviews to find out what matters to real people who already own and use the products and services we’re assessing.
When you click through from our site to a retailer and buy a product or service, we may earn affiliate commissions. This helps support our work, but does not affect what we cover or how, and it does not affect the price you pay. Neither ZDNET nor the author are compensated for these independent reviews. Indeed, we follow strict guidelines that ensure our editorial content is never influenced by advertisers.
ZDNET's editorial team writes on behalf of you, our reader. Our goal is to deliver the most accurate information and the most knowledgeable advice possible in order to help you make smarter buying decisions on tech gear and a wide array of products and services. Our editors thoroughly review and fact-check every article to ensure that our content meets the highest standards. If we have made an error or published misleading information, we will correct or clarify the article. If you see inaccuracies in our content, please report the mistake via this form.
PayPal vs. Venmo: Which payment service is right for you?
When it comes to paying and receiving digital currency, PayPal has long been the industry leader. Created in 1998 as a means for users to transfer money between family, friends, and customers, PayPal has since amassed over 426 million active accounts. But with the ever-increasing demand in the commerce, cryptocurrency, and fintech spaces, the utility of peer-to-peer (P2P) services like Venmo has expanded into the realm of small businesses, making for a worthy alternative to the old reliable.
Whether you're covering a friend's coffee or starting an e-commerce storefront, PayPal and Venmo are the preliminary choices for transactional services. While PayPal is the parent company of Venmo, there are some notable differences between the two that you should be aware of before deciding on one. Read on for a breakdown of their features, fees, transfer policies, and more.
At a glance
PayPal | Venmo | |
Platforms | Available on iOS, Android, and web | Available on iOS and Android |
Services | Credit, debit, bank transfer, and crypto | Credit, debit, bank transfer, and crypto |
Seller fees | 2.99% + $0.30 with credit and debit card payments | 1.9% + $0.10 with credit and debit card payments |
Pay limit | Up to $10,000 per single transaction, $60,000 per week | Up to $299.99 per single transaction, $6.999.99 per week for verified users |
Withdrawal times | 2 to 3 business days, or a 1.5% fee for instant transfers (up to $15 of the total amount) | 1 to 3 business days, or a 1.5% fee for instant transfers (up to $15 of the total amount) |
Business features | PayPal Zettle card reader integration, Seller Protection Program, chargeback support | Dedicated business profile, accept in-store payments, 24-hour monitoring |
Availability | Over 200 countries including the US | US only |
Platforms and availability
From a platform standpoint, PayPal and Venmo are free to use through iOS and Android apps, with near five-star ratings for both. That means you can conveniently make transactions, transfer money, and trade cryptocurrency right from your mobile device.
The main difference, however, is on the web. Built for businesses, PayPal's website provides a more flexible and detailed outlook on your sales and transactions, and most importantly, allows you to send and receive money on the platform. Venmo's website lets you sign in to view and edit your profile, but you can't make any transactions. All of that must be done through the mobile app.
Another key difference is availability. Venmo's services are limited to US-based customers only, while PayPal can be used in over 200 countries -- including those in the Americas, Europe, Africa, and Asia. If you travel often or operate an international business, then PayPal is the clear winner here.
Peer-to-peer use
For personal use and P2P transactions, both PayPal and Venmo offer casual, user-friendly methods to exchange money.
On the PayPal app or website, you can send or request money through the Family and Friends service, which doesn't charge any buyer or seller fees. All that's needed is a linked credit card or bank account on your profile and the recipient's PayPal-registered phone number or email. Since this is a peer-to-peer transaction, the standard seller protection policies are not applicable here. PayPal also gives you the option to apply for a Cash Card -- a debit card that can be used in-stores and online, and is funded by the money that's on your PayPal account.
Likewise, a bank account or credit card can be linked to Venmo for casual transactions. But unlike PayPal, Venmo takes a more social approach to money. By connecting your Facebook account or phone number, Venmo will network your profile with any mutual contact who's also registered, making it easier to send and request money. There's also a home feed on the app that publicizes the inflow and outflow of transactions within your social circle. It doesn't state the amount exchanged, but does show who the sender and receiver are and the caption, if permitted. If you're in favor of privacy, there's a visibility toggle before you make a payment on the app.
You can't go wrong with either service for personal use. PayPal follows a more traditional and fool-proof approach to sending and receiving money, whereas Venmo's social component makes for a more engaging and convenient choice.
Business use
The biggest separation between PayPal and Venmo comes in business use-cases. As mentioned before, PayPal has built a robust and intuitive commerce platform throughout the years, while Venmo has just started to expand from its P2P ways. Still, here's what you need to know about the two as a business owner.
Venmo currently gives merchants the ability to accept payments in the app, online, or in person. By registering a dedicated business profile (separate from your personal profile), customers can pay for goods and services through a digital storefront page or by scanning your business' unique QR code. With a client list including Poshmark, Abercrombie & Fitch, and UberEats, Venmo also offers the ability to integrate a "Pay with Venmo" option within your e-commerce platform. All transactions come with 24/7 monitoring and are fully encrypted for your security. Given the social aspect of the app, it can be argued that marketing your business on Venmo is much easier than on PayPal.
More: Everything you need to know about Venmo for Business
Where PayPal falls short on followers and likes, it makes up for with an arsenal of business tools and insights. PayPal's main sell is its web commerce platform, which serves as a dashboard for sales figures, billing agreements, invoices, and more. The service can also be integrated into various e-commerce platforms, virtual card terminals, and physical point-of-sale systems, for flexible payment options. Users can also opt into PayPal Zettle (formerly known as iZettle before its acquisition), an in-house card reader that transfers physical store transactions directly into your PayPal account.
More: Best credit card readers for SMBs
To keep the merchant protected from fraudulent activity and scams, all business transactions are covered by PayPal's Fraud and Seller Protection Program. Whether you're buying or selling goods and services, the company provides 24/7 monitoring, refunding services (for defective, damaged, or counterfeit items), and chargeback protection -- in the case a buyer makes a false claim.
Fees and transfer policies
PayPal | Venmo | |
Peer-to-peer fee | Free for debit, credit, and bank payments | Free for debit card and bank payments, 3% for credit cards |
Business fee | 2.99% + $0.30 for credit and debit cards | 1.9% + $0.10 for credit and debit cards |
Pay limit | Up to $10,000 per single transaction, $60,000 per week | Up to $299.99 per single transaction, $6.999.99 per week for verified users |
Withdrawl time | 2 to 3 business days, or a 1.5% fee for instant transfers | 1 to 3 business days, or a 1.5% fee for instant transfers (up to $15 of the total amount) |
Depending on whether you're receiving money as a gift or a payment for a service, PayPal and Venmo may charge a flat percentage fee. For casual use, transactions made via debit, credit, or a linked bank account are free of charge on PayPal. Venmo matches closely by offering fee-less payments through debit and bank accounts, but bills a 3% fee when using a credit card.
Where the two differ is with business transactions. For such, PayPal charges a 2.99% fee plus $0.30 for every credit and debit card payment. The exception to this is when a buyer pays via an American Express card on the American Express app. Here's a breakdown of the rates for the different payment types that PayPal accepts.
- Send/receive money for Goods and Services: 2.89% + $0.30
- Standard credit and debit card payments: 2.99% + $0.30
- QR code transactions of $10.01 USD and above: 1.90% + $0.30
- QR code transactions of $10.00 USD and below: 2.40% + $0.30
- PayPal Checkout: 3.49% + $0.30
- Invoicing: 3.49% + $0.30
Venmo, on the other hand, charges 1.9% + $0.10 for every credit and debit card transaction. That means that for every $10 that you earn as a merchant, Venmo will deduct $0.20, giving you $9.80 in profit.
More: Best small business credit cards
Given PayPal's greater prioritization of merchants, users can send and receive up to $10,000 per transaction and up to $60,000 per week. All PayPal accounts must be verified in order to make a transaction, so there is no limit depending on your account status. Venmo, which focuses more on casual payments, caps single transactions at $299.99 for unverified users. Once verified, the threshold is expanded to $6.999.99 per week.
Lastly, if you've received money in your PayPal or Venmo account, you can transfer the funds to your linked bank account for free within 1 to 3 business days. An instant transfer option is available on both services for a 1.5% fee, with a maximum of $15. That means you'll be paying, at most, $15 when instant transferring funds of $1,000 or more.
Bottom line
Choosing between PayPal and Venmo boils down to three things: The purpose of your transactions, the amount of money going in and out, and whether the payments will take place within the US or outside. PayPal is your best option if you're a small business owner who's seeking flexibility and convenience when buying and selling goods. While the seller fees are more expensive than Venmo's, there's no beating the number of business insights and tools that PayPal provides to help manage your money. For quick money transfers and effortless payments at a tap, Venmo's app-only service is secure, reliable, and free to use. Ultimately, it doesn't hurt to use both services for different purposes.
Alternatives
If you're still on the fence, here are some worthy alternatives for your consideration:
- Google Pay Send: Available on iOS and Android, Google Pay Send provides similar transactional services as PayPal and Venmo, but with no fees on debit card transactions. For P2P and business use, Google Pay Send can be integrated within e-commerce platforms and accepts payments from all major US credit and debit card issuers.
- Cash App: Arguably the third most popular P2P payment app on the market, Cash App (owned by Square) provides free money transfer services like Venmo, and the ability to invest in stocks and cryptocurrency. The service also accepts direct deposit payments and can transfer existing funds to your bank within 1 to 3 days.