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Venmo vs. PayPal: Our Honest Review of 2 Popular Payment Services
I’m an Old Millennial with the brain of a Midwest mom.
When I first heard “Venmo me” from a kid (i.e. 30-something) from the city (i.e. town with more than 5,000 people), I dismissed it as something I’d look into if I ever made my way to New York. Whatever happened to an I.O.U.?
I’m caught up now, and I realize peer-to-peer payment services are a godsend.
They’re so vital in our day-to-day lives, in fact, that tons of companies in the financial and social media spaces have created tons of ways for us to send digital money back and forth.
PayPal is the O.G. payment app — or, rather, service, since it existed long before apps… or smartphones. (A history lesson from your resident Old Millennial.)
Let’s see how this classic holds up against the new model.
Venmo and PayPal have surface-level similarities: They’re both payment-processing apps and digital wallets you can use to split the bill or buy a cute dress from your favorite small business.
One glance at either app, though, and you can see they target vastly different customers and needs. Under the hood, the differences are even more stark.
Venmo’s flagship function is a social payment app that lets you send money to friends and family for things like splitting dinner, paying your portion of the rent or receiving birthday money from your hip aunt. Like how our parents used to hand each other cash or write a personal check (sounds bulky).
Venmo’s signature is the social feed, where you can see public interactions between your friends or even strangers. When you send or request money in the app, you can add a message, and that’ll appear in the feed. Doll it up — or make it a puzzle — with emojis.
You can link a bank account or debit card to send money via Venmo for free, or link a credit card to send money and pay a 3% fee.
Since its inception, Venmo has expanded to include direct deposit, a debit card, online payment and business payments.
You can keep money received right in your Venmo balance and use it to buy stuff or send money to others. Or you can withdraw funds anytime into your linked bank account. A bank transfer takes one to three business days to land in your account, or you can pay a 1% fee (up to $10) to instantly send money to your bank.
Venmo was acquired by the payment service Braintree, which was acquired by PayPal in 2013, according to the Braintree acquisition news on TechCrunch. So — PayPal owns Venmo.
What you like or dislike about Venmo will vary depending on what you need in a payment processing system. Here are some main points to consider when comparing it to PayPal:
Pros
Cons
PayPal is the O.G. of the online payment platforms. You probably first heard about it as a subsidiary of eBay, where it made it easy to purchase your vintage clothing or bags of pine cones on the peer-to-peer marketplace.
PayPal facilitates payments for online purchases using a PayPal account, or credit or debit card. Users who have PayPal accounts can also send and request money to and from each other.
You can keep money you receive right in your PayPal account and use it to make purchases or send money to others, or you can withdraw funds anytime into your linked bank account. Withdrawals take one to five business days to land in your account, or you can pay a 1% fee (up to $10) for an instant transfer using your debit card.
PayPal’s offerings are vast compared with most of its competitors in the payment processing space, including Venmo.
It caters to individuals and businesses (with a PayPal business account); offers debit and credit cards; facilitates mobile payments; helps small businesses and contractors easily manage invoicing, online sales and point-of-sale; facilitates tips and subscriptions; oh, and still lets you stock up on clothes and pine cones on eBay and newer platforms like Instagram.
When you shop or sell using PayPal, the platform provides protections for you as a buyer or seller. As a buyer, you can lodge a dispute within six months of a transaction for the possibility of a full refund. On the seller side, PayPal will resolve disputes on your behalf and won’t charge you if you can provide proof of delivery for a disputed item.
PayPal is no longer owned by eBay; the two split into separate companies in 2015, and Recode reports PayPal’s reign as the platform’s top payment processor ended in 2020.
Depending on your personal and business needs, the pros and cons of PayPal will vary. Here are some major points to consider when comparing it to Venmo:
Pros
Cons
PayPal or Venmo not meeting your financial needs? Consider these other payment processing platforms for your personal or business transactions:
PayPal and Venmo offer increasingly overlapping services, but the apps still provide significantly different user experiences.
Whether Venmo is worth it for you to use most likely depends on whether most of your family or friends use it. However, its burgeoning business services make it an app to watch if you have a small business or side hustle selling online.
PayPal is almost ubiquitous as the payment gateway of choice for online vendors. Whether you’re a buyer or a seller, you’re likely to benefit from an account with this app.
Even though Venmo (and the Cash App) outshine it for peer-to-peer payments, PayPal is probably the most common app among your friends and family, too. You just might have to navigate a more complicated array of features to get to the “send money” part.
Which is best for you depends on your personal and business needs. You may even find that using both apps, each for different purposes, works best for your money.
If you just need a way to split the check with friends, PayPal is probably too robust and complicated. It also lacks Venmo’s fun and social environment.
However, if you need a way to manage payments for a freelance business, online store or in-person transactions, PayPal has everything you need.
Venmo doesn’t offer nearly as much support for businesses, and what it currently offers is only available to merchants by invitation. But it has plans to roll its offerings out to more businesses and will likely expand offerings in the future.
If Venmo sticks with its promised fees, merchants might be flocking to the app and leaving PayPal’s pricy system in the virtual dust.
Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.
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