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If you’ve ever shopped online, you’ve probably encountered a situation where you’re about to check out only to decide the payment process is too difficult to justify your purchase. When you’re starting a business or taking your company to the next level, choosing the right platform to accept payments from customers is essential for a smooth and functioning business.
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PayPal and Venmo are two of the most popular payment platforms. Both are free to set up and easy to use and, while there are some similarities—Venmo was acquired by PayPal in 2013—their differences outweigh their similarities. The better-suited platform for your company will help ensure your transactions are smooth, and that your customers follow through on their purchases.
Venmo and PayPal are two of the largest payment services available. Here’s our review and comparison to help you determine the best option for your business.
PayPal vs. Venmo: At a Glance
Overall, PayPal is a more versatile payment platform that works both for peer-to-peer payments and for business owners to send and receive payments. Meanwhile, Venmo specifically focuses on peer-to-peer payments, with some recent features that can support business owners, like a separate business profile on your existing Venmo account. While they are not as robust as some of the dedicated credit card processing services available from many vendors, they still work for smaller teams with minimal payment processing needs.
Here are the main features of each platform for both personal and business use.
PayPal Features
PayPal for Personal Use
If you’re looking to send or request money from family and friends, PayPal has the ability to do that both through a desktop version and the app. PayPal allows people to exchange money without revealing their personal financial information, like their credit card number or their bank account. For personal use, PayPal also offers the ability to open credit cards, debit cards and prepaid cards and to pay for purchases with installments. This can be helpful if you accrue a balance on PayPal and then want to spend that money in retail stores. PayPal also offers a PayPal digital credit line with no interest for six months when you pay for purchases of $99 or more in full.
PayPal for Small and Medium Businesses (SMBs)
When you run an online business or an in-person business, having the capability to accept payment through PayPal is a versatile option that can cater to a more diverse range of customers. PayPal is one of the most trusted names when it comes to payment processing, and when it comes to customers spending money on your services, that name recognition can go a long way in terms of getting people to make a purchase. On PayPal, merchants can accept all major credit cards, Venmo, pay later options and cryptocurrencies.
PayPal charges a fee to process business transactions. Here are some of the processing fees based on the different types of transactions:
- Transaction fee for digital payments, such as PayPal, Venmo and cryptocurrency: 3.49% plus 49 cents per transaction
- In-person payments with a PayPal quick response (QR) code: 1.90% plus 10 cents per transaction for transactions above $10
- Online credit and debit card payments: 2.59% plus 49 cents per transaction
- In-person card payments: 2.29% plus 9 cents per transaction
Additionally, PayPal offers a Seller’s Protection Program for eligible merchants. This can ensure that you are protected if a buyer either claims they did not authorize a transaction, or if they claim an item was not received. A merchant must meet certain criteria to qualify for this program, such as being based in the United States and selling tangible items.
Venmo Features
Venmo is an app that makes it easy to send and receive money between people you know. It’s primarily used as a peer-to-peer (P2P) platform but has recently expanded to offer payment processing capacity for business owners as well.
Venmo for Personal Use
When two people have Venmo accounts, the app is one of the easiest ways to transfer money between them. Venmo allows you to send money between friends and pay people for expenses like rent, shared utilities or a meal. You can find people you know on Venmo by entering their names in the app or sharing a quick response (QR) code. You can either spend the balance that you accrue on Venmo directly through the app or you can transfer your funds to your bank account.
If you want to keep your Venmo balance in the app, you can sign up for a Venmo debit card. The company also offers the option to apply for a credit card with up to 6% cash back on select purchases, and 1% on all peer-to-peer transactions. These rewards are added to your Venmo balance. Transferring money into your bank account is free and takes between one and three business days. If you want it transferred instantly, you’ll pay a 1% fee of up to $10.
As a P2P platform, Venmo has a social component to it as well in that you can have friends on Venmo, see other people’s activities and comment on activities.
Venmo for SMBs
Recently, Venmo has expanded its capability to small businesses and freelancers. In the past, Venmo members could only have one profile per person. The company now allows users to create a business profile in addition to their personal profile. A personal trainer or dog walker, for example, may benefit from being able to bill and receive money from their clients through a business Venmo account that remains separate from their personal account. There is also the ability to accept payments in-store as well as offer customers rewards and cashback opportunities.
Given the social component of Venmo, having your business pop up on customers’ feeds can be a marketing opportunity that can help get your name out there.
How PayPal and Venmo Stack Up
| PayPal | Venmo | |
|---|---|---|
| Seller Transaction Fees | 2.29% plus 9 cents for in-person credit and debit card transactions | 1.9%, plus 10 cents of the payment |
| Accessibility | Can make and receive payments through desktop and the app | Make and receive payments through the app only, can access account information through desktop |
| Payment Transfer Limits for Business | No limits to send from business account | When your account is fully verified, you’ll be able to spend a total of $6,999.99 weekly. This is combined between peer-to-peer transactions ($4,999.99 limit), authorized merchant payments and Venmo Mastercard Debit Card purchases |
| Payment Transfer Limits for Peer-to-Peer | If your account is verified, there is no total payment transfer limit. Users can send up to $60,000 at a time. Single transfers may be limited to $10,000. | $299.99 when you first open an account; $4,999.99 weekly, once your identity has been confirmed |
| User Limit for Business Accounts | Up to eight users for small and medium business accounts | One user only |
| Average Time Frame for Withdrawing Funds | Two to three business days. Instant transfer for a 1% fee. | One to three business days. Instant transfer for a 1% fee (up to $10 deducted from the total transfer amount) |
| Geographic Limitations | Global, ability to do business in 100 currencies | United States only |
| Ease of Use | More complicated user interface, but more versatile | Intuitive interface, easy to use |
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Price starts at
$14.95 per month (plus hardware)
Free trial
90 days
Key features
Versatile POS, invoicing, employee management
PayPal and Venmo work best for different uses. While Venmo is ideal for peer-to-peer transactions, it is limited in the amount of money you can transfer and send. Venmo’s account is also limited to one user. This means you wouldn’t be able to manage the account on two separate phones between you and your business partner, for example. Meanwhile, PayPal allows up to eight users for an SMB business account.
Additionally, PayPal can facilitate international transfers while Venmo is limited to the U.S. PayPal’s transfer limit is much higher, and there is no limit on transfers for business accounts. Venmo, on the other hand, is limited to a total of $6,999.99 weekly. However, Venmo’s interface is easy to use, and the app has a social component to it that PayPal does not.
PayPal vs. Venmo: Safety and Security
Both PayPal and Venmo offer standard security features to keep your information safe. The services protect each transaction with encryption, two-factor authentication (2FA) of your account and a customer support team to assist you in the event of a problem. You can feel confident keeping your data secure regardless of what platform you choose.
PayPal vs. Venmo: Business Uses
When it comes to business, PayPal is the more versatile choice and a more fitting option for almost any small business owner. PayPal’s features are set up specifically for small and medium companies, while Venmo is traditionally a peer-to-peer platform that has more recently transitioned into offering services for business accounts.
However, sole proprietors, such as consultants, tutors or babysitters, may benefit from having a business profile on Venmo, and find that customers appreciate the option of paying through Venmo. When you sign up for PayPal, you’ll still have the ability to accept money from Venmo, making it the more versatile choice overall.
Bottom Line
While PayPal is a superior choice as a payment processing platform for small businesses, Venmo does have some unique features that may be worth considering.
If you need multiple team members to have access to your business’s payment processing platform, use PayPal. Venmo only allows one user per account.
If you plan on selling or doing business with customers outside of the U.S., use PayPal. Venmo is limited to U.S. transactions. Additionally, keep in mind that Venmo has much stricter payment transfer limitations.
Venmo’s business profile option can be a great choice for sole proprietors who want an easy way to charge clients and can be used as a supplemental payment processing option to offer clients. Overall, Venmo remains an easy and accessible U.S.-based peer-to-peer payment platform while PayPal is the company better suited to process business transactions.
