PayPal vs. Venmo: Key differences, advantages, and disadvantages

Online payment services such as PayPal and Venmo are improving. But how do they work, and what are the advantages and disadvantages?

By Amily Smith Last updated Nov 3, 2022

Digital payment systems abound for sending or receiving money. However, PayPal and Venmo have become verbs, as in “PayPal.me” or “Venmo me.”

The type of transactions you want to make and the parties you want to trade monies with will determine which one to choose. For example, paying your babysitter or splitting a restaurant bill with pals are ideal for Venmo, where you can make payments more sociable.

For merchant purchases and customer payments, PayPal is the top choice. PayPal is more business-to-consumer than Venmo for business payments (B2C).

Who triumphs in the conflict between PayPal and Venmo? The two payment services do overlap. We examined features, pricing, speed, and versatility to help you select.

Read on to find out everything you need to know because it’s trickier than you might think. They might both have a niche in the market, providing distinct advantages for various use cases.

Does PayPal own Venmo?

Let’s address the elephant in the room right away. Yes, PayPal owns Venmo, and has since December of 2013. This means that technically all money transfers on both services are handled by PayPal Inc. behind the scenes.

Venmo and PayPal do, however, have a lot of differences when it comes to target markets, services provided, and customer experience, which we’ll get to in a second. Just be aware that you’ll need to look at other services if you want to avoid PayPal for any reason. Apple Pay, Google Pay, and Cash App are a few well-liked substitutes.

PayPal vs. Venmo at a Glance

PayPal vs. Venmo
Feature	PayPal	Venmo
Platforms	Web, smartphone, online shopping checkout, in-store checkout	Mostly smartphone with limited web, online shopping, and in-store abilities
Payment methods	Bank account, debit card, credit card, PayPal balance	Bank account, debit card, credit card, Venmo balance
Fees on payments	Free from bank account; 2.9% plus 30 cents if paid with debit or credit card	Free from bank account or debit card; 3% if paid with credit card
Bank transfers fees & speed	Free for 3- to 5-day transfers; 1.75% for instant transfers (25 cents min, $25 max)	Free for 1- to 3-day transfers; 1.75% for instant transfers (25 cents min, $25 max)
Limits	Up to $60,000, including $10,000 in a single transaction	$6,999.99 for all transactions during the last 7 days*
Geographic reach	Can be used in more than 200 countries, with 25 currencies	U.S. users only
Best for	Online shoppers, small business owners, those who sell/buy internationally	Making payments to people you personally know

PayPal vs. Venmo: Similarities

You should be aware that Venmo and PayPal will typically function similarly when deciding whether to use one over the other. Both are capable digital wallets that can transfer money—often at little or no cost—to other users or bank accounts.

Both services offer free account creation, free bank account linking, and the option to use debit or credit cards for a fee. They also provide physical cards, with Venmo providing a linked Mastercard debit card and PayPal providing credit, debit, and prepaid cards. All iOS and Android devices are supported.

You can use your funds to purchase a wide variety of goods both in-person and online in the United States thanks to the millions of retailers who support both services. Both services encrypt your data, so security shouldn’t be an issue, but only PayPal offers fraud protection for the reasons we’ll discuss in a moment.

Venmo vs PayPal: Differences

While most transactions will work the same whether you use Venmo or PayPal, there are a few significant differences between the two services, which we’ve listed and explained below.

International payments

Only American residents can use Venmo; payments from abroad are not supported. Likewise, the service only accepts US bank accounts. PayPal, however, supports more than 200 nations and 25 different currencies. You really don’t have a choice but to use PayPal if you’re outside of the USA.

Target audience

Venmo has a much more narrowly defined market niche than PayPal, which markets itself as an all-inclusive solution to money transfers for businesses and individuals. It has a strong social component, and its true use is to transfer money between friends and trusted people to split costs for small payments like meals, cab rides, and other similar expenses. Although it can be used for sending money to friends and family, PayPal’s primary goal is much more professional. The areas where PayPal excels are in transactions, purchases, and general financial tools.

Transaction limits

You’ll discover that the things you can do with your money differ significantly. Due to the fact that Venmo is primarily intended for personal use, users are only allowed to transact up to $6,999.99 per week, which is pitiful for more serious users and businesses. And you can only exceed that limit if you are completely verified. Only $299.99 can be spent weekly by unverified accounts.

PayPal, on the other hand, has significantly higher limits that permit businesses to operate without restriction. One-time payment of $4,000 can be sent by people without PayPal account. Verified accounts may be restricted in the amount they can send per transaction but do not have any overall limits. The total one-time payment cap per account is set by PayPal and can range from $10,000 to $60,000.

Fraud protection

Venmo does not provide any buyer or seller protection because it is only meant to be used with people you already trust. PayPal is a better option for online transactions with strangers because it provides strong buyer and seller protection. Because of this, Venmo is frequently used for fraud and scams, so you should use it with greater caution.

Business features

PayPal is a better platform for businesses or individuals looking to sell things online because it has a ton of extra features for sellers. Higher transfer limits, expanded country support, fraud prevention, accounting assistance, point-of-sale options, and even cutting-edge features like PayPal Business Loans for small businesses are among these.

Supported platforms

On a browser, an Android device, or an iOS product, you can use Venmo and PayPal. Despite this, PayPal functions more like a full-featured website platform with a variety of tools and options. The app is much more straightforward when used on a computer with a full browser. In contrast, Venmo is a mobile-only service. The Venmo apps are easy to use, neat, and have a fun social feature that displays your transactions (if you allow it). The website resembles an expanded version of the app in most ways.

Fees

Venmo and PayPal have a lot of similar basic fees. Basic bank transfers to your bank are free (usually take 2-3 days), credit card transactions cost close to 3%, and instant transfers cost 1.5%.

However, once you begin utilizing more of PayPal’s services, things can become considerably more challenging. There are numerous different merchant fees, international transaction fees, purchase fees, and other fees, for instance. Read up on them completely here. Naturally, since Venmo doesn’t provide that many services, it doesn’t have to deal with a wide variety of fees.

Can you transfer money between both services?

Despite sharing the same infrastructure for transfers and belonging to the same larger company, Venmo and PayPal cannot currently be used to send money to each other directly. Both services are kept entirely separate from one another by PayPal.

Nevertheless, by simply transferring money from Venmo to your bank account and then from your bank account to PayPal, you can still get around this restriction. The only drawback is that it might take a few days to complete these steps, but in most cases you can do it for free. As an alternative, you can do it right away by paying instant transfer fees.

Overview: Which is right for you?

Which of the two services, Venmo or PayPal, is better for you? Well, that depends on your goals. Venmo is a great choice if you reside in the US and want to send friends a quick money transfer. Thanks to sophisticated buyer and seller protection, PayPal is the way to go for merchants and online shoppers. If you intend to use PayPal for direct payments, it is a more practical choice because it is more commonly accepted as an online and in-store payment option.

To assist you in choosing between Venmo and PayPal, the following is a brief comparison of which tasks each platform is better for:

PayPal:

Buying and selling online and in-store
Business transactions and money management
Sending money overseas
Transferring large payments

Venmo:

Splitting bills with friends
Paying roommates for rent
Sharing payments socially