Venmo or PayPal: How to Choose the Best Payment App for Your Needs

Venmo and PayPal are two payment processor/digital wallet hybrids you’re most likely to encounter online. Does PayPal own Venmo? Yes, this mobile payment service was acquired by PayPal in 2013. Are Venmo and PayPal the same company? Technically, no, but in practical terms they both are parts of the same business entity. But is Venmo the same as PayPal, though? No, these are two different services serving different needs. Keep reading to realize how they compare and which is a better option for you. 

Venmo: a Payment Service With a Social Aspect

Venmo is a peer-to-peer payment service primarily meant for mobile use. As a quick and convenient way to exchange funds, the app has become widely popular among younger users, prioritizing mobile gadgets for personal transactions. 

Venmo Features and Benefits

Venmo has a few aces in the sleeve that make it a preferred choice for millions of users.

• Ease of Use: With just a few taps, you can transfer funds to friends, family, or businesses;
• Social Aspect: One of the prime benefits of Venmo is its feed. This social network feature adds a fun and interactive element to the app;
• Low Fees: One more reason why users choose Venmo is its affordable processing fees, standing at the lower side of the rate range as compared to other P2P systems;
• Splitting Bills: Whether it’s splitting dinner at a restaurant, sharing rent with roommates, or pooling money for a group gift, Venmo’s split feature is a convenient way to divvy up expenses;
• Payment History: The service keeps a detailed record of past transactions, offering its users an intuitive way to track spending and review payment history for individuals and businesses alike;
• Venmo Card: In a collaboration with Mastercard, Venmo has created its branded debit card. It allows users to spend their balance in-store and online.

Venmo Limitations

As with any other system, Venmo has some drawbacks and limitations, too. 

• No International Payments: This system is only available in US;
• Default Publicity: With the default settings, your transactions, along with comments, will be visible to everyone, including your direct contacts. To keep your operations private, you should change the security settings manually;
• Transfer Limits: Venmo imposes limits on how much a user can send and receive, which may be restrictive for high-volume transactions or larger payments.

PayPal: a Worldwide Leader

PayPal is among the market old-timers. Comparing PayPal vs. Venmo, we encounter the first striking difference between the two: while Venmo is a P2P provider, PayPal is a global online wallet.

PayPal Features and Benefits

Now that you’ve looked into the standout features of Venmo, it’s time to consider PayPal’s benefits.”

• Global Availability: PayPal is accepted by online merchants and businesses across the globe, making it a convenient payment option for international transactions;
• Buyer and Seller Protection: Buyer protection policies safeguard customers against unauthorized access and item-not-received cases, while sellers are protected against fraudulent chargebacks and account theft;
• Integration with E-commerce Platforms: PayPal smoothly integrates with popular e-commerce platforms such as Shopify, WooCommerce, and Magento;
• Convenient Payment Processing: PayPal makes it easy for users to send money, request payments, and manage various kinds of transactions from their desktop or mobile device;
• PayPal Cards and Credit Products: PayPal debit card from Mastercard offers easy access to your funds and lucrative cashback for purchases you make while using the service.

PayPal Limitations

With a lot of perks, PayPal has a few drawbacks to be mentioned.

• Hold Funds: PayPal may place received funds on temporary hold, especially for new accounts or transactions deemed high-risk;
• Account Limitations: PayPal may impose limits on account activity, such as withdrawing, sending, or receiving funds. It might happen due to the suspicion of fraud or non-compliance with PayPal Use Policy;
• Currency Conversion Fees: When making international payments that involve currency conversion, PayPal applies exchange rate fees.

Venmo or PayPal: How Do You Choose Between the Two Platforms?

Before you make a final decision on going for Venmo or PayPal, let’s see how these systems stack up at some crucial aspects we normally consider when choosing an online payment processor. 

Venmo vs. PayPal: Similarities

• Have desktop and mobile versions;
• Can sync your contacts to the app;
• Allow for linking a bank account, debit, or credit card for payments;
• Allow for sending, receiving, and requesting money or transferring the balance to your bank account;
• Are available for instant transfers at a 1.75% extra fee;
• Fit for individual and business use;
• Have certain transaction limits;

What Is the Difference Between PayPal and Venmo?

• PayPal is available globally, Venmo is bound to the US and USD only;
• Sending money with Venmo from your linked bank account, debit card, or Venmo account is free of charge. Meanwhile, PayPal will charge 2.90% plus a fixed fee depending on the payment’s currency;
• Credit card payments are charged at 3% and 2.90% for Venmo and PayPal accordingly;
• Receiving funds with Venmo will cost 1.90% + $0.10 for individuals and businesses alike. For PayPal, these fees will vary depending on the type of payment and start at a higher mark of 2.29%;
• PayPal has no payment transfer limits for businesses. Verified Venmo business profiles are limited to transfers up to $49.999.99 per week, with a $10.000 restriction per transaction;
• For peer-to-peer transfers, PayPal sets no limits on total payments while restricting the maximum sum of a single transaction to $60.000. Venmo allows verified users to send up to $60.000 a week. 

Final Thought

So, is PayPal the same as Venmo? As you can see by now, from a design and functionality perspective this is definitely not so. Affordable fees and a user-friendly app make Venmo a real find for peer-to-peer payments. PayPal, on the other hand, shines in smart payment solutions for merchants and growing businesses. The choice whether to use Venmo or PayPal ultimately depends on your financial needs.

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