Venmo vs. Paypal: how these payment applications stack up | Savings and budgeting

When Rachel Damuth hosted a garage sale this year, she was surprised at how many people wanted to pay electronically. Fortunately, the Redford, Michigan resident had a Venmo account.

“I gave them my name for research,” says Damuth. The buyers then sent money through the payment app for a cashless purchase. She even used the app to sell the family’s campervan, noting “It’s a safe way to get money.”

Payment apps are popular, especially with young adults, according to Jed Danbury, vice president of international sales for Computop, a global payment services provider. “It’s easy to pay each other,” he says, and it eliminates the need to bother with money.

Venmo and Paypal are two of the more popular payment apps, and although they are part of the same company, there are enough differences between the two that you want to use them both.

Since entering the scene in 2009, Venmo has quickly become a popular option for splitting the bills and paying each other. The app has a social aspect that allows users to add stickers, emojis, and notes and make their payment stream public if they want.

However, its streamlined interface makes it an attractive way for people of all ages to send and receive money. “It’s incredibly convenient,” says Judy Thomson of Clarksville, Michigan.

Sending payments from a linked bank account is also free, with no monthly fees or charges. debit card or Venmo balance. However, there is a 3% charge for payments sent with a linked credit card.

Due to its ease of use, Venmo has become the payment method of choice for many online classifieds users. “It’s definitely the preferred way to sell on (Facebook) Marketplace,” says Damuth.

Over the years, Venmo has expanded its functionality to include direct deposit, purchase protection for qualifying items, and an option to purchase cryptocurrency. In addition, the app has its own debit and credit cards.

Paypal predates Venmo by over a decade and dates back to 1998. “Paypal was created for eBay to make payments online,” Danbury explains. Compared to sending checks and money orders for auction purchases, Paypal has made it easier to complete transactions.

Today, the functionality of Paypal goes far beyond sending and receiving money. It has all the functionality of Venmo as well as a comprehensive set of business tools that include invoicing, in-person and online payments, and corporate finance solutions. The service has become part of the checkout process of countless retailers, including big chains like Walmart and Target.

“We use Paypal for almost everything we pay online,” says Damuth. She likes the security of knowing a store isn’t getting her credit card number, and using the service is faster than pulling out a card and grabbing it at the checkout. “For me, it’s a matter of convenience,” she says.

This convenience comes at a cost to businesses, however. Thomson uses Paypal for her jewelry business, Baba’s 1909, and finds that she receives fees even for payments that are marked as “friends and family” transactions. “Because I billed it, they consider it a business transaction,” explains Thomson.

For personal accounts, there is no charge for payments sent with money from a linked bank account, Amex sending account, or Paypal balance. However, those sent from a linked card will incur a fee of 2.9% plus 30 cents.

For consumers, Venmo and Paypal offer similar services and a similar pricing structure, although some users find Venmo to be more user-friendly.

“With Paypal, I feel like I have to overcome more obstacles,” says Thomson. She finds that it can take longer to log in and complete transactions using the Paypal app compared to Venmo. Additionally, while both apps indicate that it may take several days to transfer money to a bank account, Thomson received money from Venmo within 24 hours.

However, on the business side, Paypal has its advantages. “Paypal makes you look more professional,” says Thomson. Additionally, she feels the buy protections are stronger for buyers and sellers on Paypal compared to Venmo transactions.

Do you need both payment apps or will one suffice? The answer depends on how you use the apps and what your friends and family are using.

Venmo seems to be preferred by young adults. “This is how we give money to our (college age) daughters, and this is how they pay us too,” Damuth says. She adds that the 20-something photographer for her daughter’s senior photos has also asked to be paid through Venmo.

However, if you run a small business or want to be able to pay for purchases online, Paypal may become your go-to app. In fact, Paypal has become such a popular payment option that it can even be used in-store at retailers such as Best Buy.

Whether you use Venmo, Paypal, or both, be smart about how you use payment services. Follow privacy and security rules to avoid scams and keep your money safe.