Managing money using a digital wallet has been an evolving experience since the turn of the century. Two platforms have risen to the top of this unique online industry: Venmo and PayPal.
Venmo is a popular option is a free digital wallet that allows users to make purchases or send money to friends. Signing up is easy for those who have a Facebook account or an email account. Just link a bank account or debit card to the Venmo and you can send money to any phone number or email account, whether they have a digital wallet or not.
PayPal is a long-standing digital wallet service that was originally introduced with eBay. It is one of the oldest and most trusted digital wallet services that exists today, having been founded in 1998 and taken public in 2002.
It should be noted: Venmo was purchased by Braintree in 2012 and PayPal acquired Braintree in 2013.
What Is the Key Difference Between Venmo and PayPal?
In the Venmo vs PayPal debate, the primary difference between these two services is based on how social the user wishes to be. Venmo asks users for comments on every transaction. Then your friends can see the comments which were posted for your transaction, making it feel like its own social media platform.
PayPal is more of a traditional business experience. The transactions are generally private and can feel somewhat impersonal. You can send a personal message to someone when giving them money, but it is a private message between the send and the recipient.
This means Venmo is a system that works to emulate cash payments, while PayPal is a system that works to emulate debit or credit transactions.
What You Can Do with Venmo
Venmo is specifically designed to be used with “friends who trust each other.” It is a personal payment service that is generally for individual-to-individual payments. Some businesses may have a Venmo account that would accept a payment, but is generally a service that is designed to help the user pay someone when there is an outstanding debt owed.
Think about it like this. If you went out to dinner with a friend and you were splitting the check, your Venmo account would probably not be able to pay the business for the debt that was owed. What you could do is pay your friend back through Venmo for your portion of the check while they used their debit or credit card to pay the restaurant.
Venmo is generally treated as a mobile app, but you can access your account through a computer. You’ll need to go to the Venmo website, log into your account, and then you can manage your funds and see your social newsfeed.
Users can also access their Venmo account balance through some third-party apps as a method of payment. There is no fee for purchases or money that is sent to another account through this method.
What You Can Do with PayPal
PayPal has developed into a digital wallet service that feels a lot like a bank account. Over the past 20+ years, this service has evolved to offer numerous payment and merchant services. You can access your PayPal balance with a debit MasterCard and earn 1% cash back on your transactions. Some members qualify for instant lines of credit. Some stores, such as Home Depot, have even begun accepting PayPal as a payment source at the point of sale.
You can still send individual payments through PayPal as well. If you have contact information for someone, you can send them a notification that they have cash. To access it, users may need to setup their own PayPal account.
One added benefit to PayPal is that people can send you payments without needing their own account. They just need to enter debit or credit card information onto a PayPal platform with your contact information. This will give you the payment you need.
PayPal also offers the benefit of accepting merchant payments through an e-commerce platform or as a point-of-sale app. Using a swiper that is similar to what Square offers, business owners can accept payments for goods or services that are usually deposited directly into their account without the need to run batches like other credit card processors require. This makes it easy for new businesses, freelancers, and those in the gig economy to accept payments from most major credit cards without the hassle of complicated accounting.
PayPal also has copy-and-paste buttons available through a user’s merchant account that can be added to a website, creating an easy way for anyone to pay or donate funds.
Venmo vs PayPal: What is the Cost?
Most of Venmo’s transactions do not have a transaction fee. You can transfer funds between friends, using a checking account or debit card without incurring a fee. Users can also transfer funds using a credit card, but this initiates a 3% transaction fee.
PayPal offers free transfers of funds that occur from within the digital wallet. If a user has a positive monetary balance, they can transfer funds to another account without a transaction fee. Sending money directly with a debit or credit card incurs a 2.9% + $0.30 fee. International transactions may have higher fees, even if they are paid in the domestic currency. Some international sales may have a 4.4% transaction fee.
Which Platform Is Easier to Use?
Venmo vs PayPal reviews generally conclude that the former, not the latter, is the platform which is easier to use. That really isn’t a fair comparison. Both platforms serve a specific demographic, so different people will find each platform easier to use than the other.
Venmo is designed to be a personal payment system. It is a way to carry cash with you without actually carrying any currency. The system uses bank-level encryptions and security to protect account holders from experiencing an unauthorized transaction. Even if an identity is breached, the maximum liability to a user is just $50 when Venmo is contacted about the breach within 48 business hours of the unauthorized transactions.
PayPal has similar security protections and user guarantees. Account holders have multiple methods of accessing their balance as well. You can use a debit MasterCard, input the account email address at some point-of-sale machines to complete a purchase, or log directly into PayPal when shopping online to send a payment from an existing balance.
In the Venmo vs PayPal debate, both services make it easier to manage money digitally. Owned by the same parent company, the decision for users will usually depend on why the account is needed. Venmo is easier to use when you’re making person-to-person payments. PayPal tends to be easier to use when making person-to-business transactions. If one were to compare only the P2P payment option, however, Venmo has a process that is generally easier to use compared to PayPal’s process.