Payment apps can make sending money to others, buying things online, or splitting the cost of a meal out with friends quicker and easier. There’s no need to enter your credit card details or deal with the hassles that cash and checks can present. That said, you may wonder about the difference between two popular options, Venmo vs. PayPal, and which one better suits your needs at a given moment.
Perhaps surprisingly, Venmo is owned by PayPal, so these apps share many convenient features. Learn how they differ and which one may be right for your financial needs.
Key Points
• Venmo enables peer-to-peer transactions within the U.S. and features social elements to share transaction details.
• PayPal supports both personal and business transactions globally, available to both U.S. and international users.
• PayPal also offers certain social features, such as a “Sell on Social” option that allows users to share items for sale with their social network.
• Both Venmo and PayPal impose fees on credit card transactions and instant bank transfers.
• Security measures include encryption and fraud protection, among others, though users should remain vigilant against phishing scams.
Key Features Comparison
Here are a few of the key features of Venmo and PayPal, and how they compare to each other:
| Venmo | PayPal |
|---|---|
| Transactions must be initiated through the mobile app | Transactions can be initiated through the mobile app or PayPal’s website |
| Primarily used for peer-to-peer payments, though can be used for business as well | Can be used either for peer-to-peer or business transactions |
| Can both send and request money | Can both send and request money |
| No fee to pay with a savings or checking account or debit card; currently a 3% fee for using a credit card | No fee to pay with a bank account; currently 2.99% plus a fixed fee to use either debit and credit cards |
| Spending limit of $7,000 a week and sending limit of $60,000 a week for verified accounts | No limit on spending or sending, though potentially up to $60,000 per single transaction for verified accounts |
| Domestic transactions only | Domestic and international transactions |
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
Fee Structures
Both PayPal and Venmo charge fees for sending and receiving money in many different situations.
• Personal transfers with both Venmo and PayPal are free, though there are some limitations to the amount and frequency you can send money to or from friends for free (see general guidelines above). These limits can vary depending on whether your account has been identity-verified or not.
◦ If you are transferring money from the app to your bank account/debit card, both payment services will do that for free within a few days. If you want to have that transaction completed instantly, comparing Venmo vs. PayPal fees again find they are equal (at the time of publication). Each charges 1.75% of the transaction amount, with a minimum of $0.25 and maximum of $25. PayPal may add currency conversions for international transactions.
◦ Note that there may be limits on how much you can transfer in this way in a single transaction or specific time period.
• Business transactions may also come with a fee for the business that is accepting payments as well as for consumers (as noted above) who pay with a credit card. Venmo doesn’t charge a fee when you pay with a debit card, but PayPal typically does.
• International transactions are not currently supported by Venmo. If you use PayPal to send payments to someone in another country, there is an international fee of 5% of the transaction, in addition to possible currency conversion and other fees.
Costs to Be Aware of
While both PayPal and Venmo are upfront about their fee structures, there are still a few costs that may seem unexpected if you are new to these platforms. A couple of common fees to note:
• Both platforms will charge you if you send money using a credit card. You can avoid this fee by sending money from a checking or savings account or your existing balance. (As mentioned previously, PayPal often charges a fee if you use your debit card as well.)
• Another cost to watch out for is that both PayPal and Venmo charge a 1.75% fee for instant transfers from your account in the app to your bank. To avoid this fee, select a normal bank transfer, which generally takes a few days to process.
Recommended: 10 Personal Finance Basics
Security and Fraud Protection
Both PayPal and Venmo work to protect their users. A few points to consider:
• Encryption: Both PayPal and Venmo use encryption to protect their users’ data. It’s important, however, to understand that there are many phishing scams where criminals pretend to be reaching out on behalf of either Venmo or PayPal. Be vigilant about any communication you receive that says they are from either PayPal or Venmo, and check the payment app itself to see if you are being contacted by the providers.
• Fraud protection: Venmo and PayPal both offer purchase protection for certain transactions which can help prevent fraud when you shop. You may be able to get refunded in the event that a purchase does not arrive or is not as described.
• Dispute resolution: PayPal has a Resolution Center where you can flag any transaction you don’t recognize and otherwise dispute charges. Venmo allows users to open a dispute about a transaction within the app.
Recommended: APY Calculator
Social Features
Like many payment apps, PayPal and Venmo encourage interaction with friends, family, and others in your social network. PayPal has a “Sell on Social” feature that allows people to easily share items for sale with their social networks.
Venmo is widely seen as having robust social features. (Using emojis is popular on the platform, for instance.) Depending on your privacy settings, you may be able to see the purchases and other transactions of your friends on Venmo. Make sure that you adjust your privacy settings to reflect what you feel comfortable sharing.
International Capabilities
When it comes to PayPal vs. Venmo and international capabilities, there are major differences.
• Supported countries: Currently, Venmo is only supported in the U.S. If you have moved outside the U.S. and need to access any funds you have in your Venmo account, you’ll need to contact Venmo support. PayPal, on the other hand, is supported in more than 200 countries and regions. In this way, in a Venmo vs. PayPal comparison, PayPal would be the better option if you want to conduct international transactions.
• Currency conversion: PayPal typically charges the retail rate of exchange, plus a currency conversion fee of 4.5% of the transaction.
• Cross-border fees: If you send or receive payments internationally with PayPal, you will likely pay a cross-border fee. This will vary depending on the location involved, but is typically a percentage of the total transaction.
Recommended: How to Wire Money in 5 Steps
The Takeaway
Venmo and PayPal are two of the largest companies that help people send and receive money, both for purchases as well as between friends and family. There are some significant differences between PayPal and Venmo (such as Venmo only being supported in the U.S.). While there are ways to use these apps to send money for free, charges with certain types of transactions — such as those where you use a debit card — and fees may vary. Educating yourself about PayPal vs. Venmo can help you decide when to use which payment apps.
Another way to send funds is using tools that your bank account offers.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
Can businesses use both Venmo and PayPal?
Businesses can use Venmo and PayPal to receive or send money online. A business needs to set up either a Venmo Business or PayPal for Business account, which may come with additional processing fees. You’ll also want to make sure that you are aware of the different refund policies before accepting Venmo or PayPal for business transactions.
Are there transaction limits on Venmo and PayPal?
Yes, both Venmo and PayPal have transaction limits in place. Venmo has a weekly spending limit of $299.99 if you have not verified your account. If you have verified, you can send up to $60,000 per week and also spend a combined $7,000 a week on purchases with Venmo. If you have a verified PayPal account, there is generally no limit to the total amount of money that you can send, however PayPal may limit the amount that you can send in one transaction. Without verification, you can make a one-time payment of up to $4,000.
How do refunds work on each platform?
With PayPal, you can request a refund, which will be returned to your original payment form (say, credit card or bank account). Keep in mind with PayPal is that if you send money via “Friends & Family” instead of as “Goods & Services,” your transaction is not covered by PayPal’s Purchase Protection, so you may not be able to get a refund if the seller chooses not to issue one. Refunds on Venmo work similarly: The Purchase Protection program covers certain transactions. You must contact the vendor you sent money to, who can refund you via your original form of payment.
Photo credit: iStock/MStudioImages
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOBNK-Q324-081