Venmo and PayPal are two of the most popular peer-to-peer payment apps in the US. Both are primarily used for sending and receiving money online, as well as settling payments with authorised vendors and merchants. In this comparison we will consider Venmo and PayPal’s similarities and differences, as we deep dive into the functionality and features of both money transfer services.
Founded in New York in 2009, Venmo is a mobile app that allows users to quickly and easily pay and request funds. Millions of people in the US use Venmo to send remittances every day, but the company advises customers to use discretion when paying and getting paid with Venmo. This is because the app has been designed for money transfers between acquaintances and payments cannot be cancelled: once a customer has sent money, the funds will be immediately available to the recipient and the transaction cannot be reversed.
PayPal, however, functions quite differently. Founded a decade prior to Venmo, PayPal has been at the forefront of digital payments since it launched as an e-wallet service. Over the last 20 years, PayPal has become one of the most well-known brands in the world, as it continues to develop its offerings as a multifunctional payments platform. As of 2021, the company boasts a vast customer base of 400 million retailers, business owners, freelancers and individuals, all of whom use the PayPal website and mobile app for sending, spending, managing and requesting funds online.
In 2013, Venmo was acquired by PayPal, and since then it has reported increased growth of 40 million users (between 2017 and 2020). Venmo payments are accepted at more than 2 million retailers in the US and company revenue is worth an estimated $450 million.
Generally speaking, Venmo is more often used for personal transactions, whereas PayPal is preferred by customers making purchase-oriented payments; but there is also some overlap between the two. Both brands are so well known in the money transfer world that customers who use them to pay and get paid have adopted Venmo and PayPal as interchangeable remittance verbs: “Have you Venmo’d me for dinner?” or “Did you get my PayPal?” In this comparison we want to identify which of the two comes out on top for offering the most fairly priced, efficient and secure global coverage of international transfer services.
Finding out which of these two brands offers the lowest fees for digital remittances is important information. If it is cheaper to use the services of a money transfer company, we will always recommend this option.
Arranging a next day transfer service is free when using your debit card or the bank account linked to your Venmo account.
There is a 1% fee applied to all instant transfers.
A fee of 3% is also applied to payments made via credit card.
Fee-free payments for American Express customers when arranging a Venmo payment via the American Express app
No fees apply to payments made via the bank account linked to your PayPal account.
PayPal applies a 2.9% fee + £0.30 to all debit and credit card payments.
Other fees include PayPal’s “cross-border personal transaction fee” which changes depending on the destination country and transfer amount. Transfers to the US, Canada, and Europe, will incur the following fees:
For the rest of the world, the following fees apply:
Fee-free payments for American Express customers when arranging a PayPal payment via the American Express app
PayPal’s fee structure is famously complicated and somewhat rigid: whereas Venmo is more flexible. If customers send money with Venmo using their debit card or linked bank account they will be able to avoid fees of any kind. PayPal, however, adds fees to all transactions made using debit or credit card.
In this section we ordinarily compare the exchange rate spread applied to foreign currency transfers through each brand. Venmo, however, does not offer international payments of any kind, keeping this section short and sweet.
Exchange rates are not applicable to Venmo transfers
The exchange rate spread applies to most PayPal transfers ranging between 3 – 5% but the total cost is not displayed until the final stage of the process. Customers can use the PayPal Currency calculator, found in their online Wallet, to view current exchange rates. There is also a Currency Converter Tool on the website.
As Venmo does not provide an international transfer service, PayPal has to be the winner. Although PayPal is relatively upfront about currency conversion rates, when compared to leading money transfer providers like Wise and XE who offer to match the mid-market rate, PayPal exchange rates are 3 – 5% higher, making them a far less competitive option.
In this section we typically look at the remittance locations covered by both brands. As Venmo is US-only, it won’t take long for us to summarise their coverage, but when it comes to PayPal it is quite a different story.
Venmo is only available to users physically located in the United States
PayPal can facilitate transfers to over 200 countries using 25 different currencies
PayPal has established a wide-reaching global network that customers can take advantage of by sending and receiving money from all over the world.
PayPal offers a range of transfer speeds; all of which come with varying fees.
The quickest transfer service available is sending funds from one PayPal account to another.
The slowest transfer speed is applied to PayPal payments which require funds to be withdrawn from a linked bank account, then converted; this process can take between 3 – 5 business days.
PayPal offers a wider range of transaction services complete with varying speeds. Customers can secure faster payments if they are happy to pay more for fees; alternatively, PayPal to PayPal transfers are the quickest and cheapest way to move money.
Payments are easy to set up with Venmo: recipients can be found using their full name, email address, phone number or Venmo username.
Venmo payment options include:
Recipients can receive funds either by bank transfer or via their PayPal account: the latter is a much faster option.
PayPal remittances can be paid for by:
Transfer types include:
Venmo is an efficient way of sending money between account holders, but PayPal is better equipped to handle global transfers and more accommodating of different payment types.
The Venmo mobile app has been given 4.9 out of 5 in the App Store and 4.3 on the Google Play Store, indicating that iPhone users have better experiences overall. Having said this, over 12.1 million reviews have been posted on the App Store, compared to 503,000 reviews on the Google Play Store; therefore, an average score of 4.6 is very good on the whole.
Looking at the 4 and 5 star reviews posted online, it seems most users are pleased with the multifunctionality of the app, instant money transfer service, quick sign up process and digital wallet features including its compatibility with PayPal’s PayPoint.
Negative feedback (1 and 2 star reviews) posted by users flag a lack of communication from customer support, privacy concerns regarding the social feed feature, issues with in-store purchases and ATM withdrawals, as well as unstable connectivity and other glitches when using the mobile app.
The PayPal app has been rated over 3 million times by iOS and Android users. It has been awarded 4.2 out of 5 on the Google Play Store and 4.8 on the App Store: this levels out to an average rating of 4.5 out of 5.
Positive feedback praises the app’s fast and easy mobile transfers, high quality data encryption and convenient two-factor authentication, as well as praise for PayPal’s Buyer and Seller Protection programme.
Negative comments relate to technical issues, dissatisfaction with the user interface and high profit margins applied to foreign currency transfers. Further to this, some users report delays to the release of funds sent from other PayPal accounts and some find it easier to use the website than the mobile application.
This one is too close to call: both companies have received good and bad feedback from users. The difference in the average online comes down to 0.1, and when reading through reviews, it’s clear there are pros and cons for each application.
In this section we will size up the overall performance of Venmo and PayPal, to see how accessible, transparent, secure and easy to use they are.
As the parent company of Venmo, PayPal has over a decade’s more experience in the online payments world, and is a well-established staple of the industry. Although easy to use and equally as secure as PayPal, Venmo is only available in the US and therefore does not accommodate international users.
It comes as no huge surprise that PayPal reigns victorious in the battle between these two mobile money transfer companies. Venmo is an excellent US-based option for customers who wish to arrange swift payments between friends and family. As the younger subsidiary of PayPal, however, Venmo does not offer the same international coverage, payment options and transfer methods as this titan of industry. Conversely, PayPal is a one-stop-shop for all kinds of global payments and has forged a name for itself as a pioneer of easy online payments.
Despite being the winner of this comparison, PayPal definitely has several issues which require consideration. These include unfavourable exchange rate spreads, high fees and commissions, as well as problems with customer transparency. For these reasons, PayPal does not come out on top when compared to specialist money transfer companies such as Wise, Azimo, WorldRemit and PaySend. The aforementioned companies all beat PayPal when it comes to low-cost transfer fees for cross-border transactions. You can find out which service providers are better in our guide: Alternatives to PayPal for International Transfers.
April is a journalist and full-time content writer for MoneyTransfers.com. Over the last decade she has written for a number of different online and print publications. Having lived overseas in Canada and Vietnam, April hopes to see more of the world as soon as possible, with Japan at the top of her travel list. As a former expat, April has first-hand experience of managing finances from overseas. She enjoys writing about forex trends and the future of banking.