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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.
$9.95 to $69.95
From 0.3% plus $0.08 per transaction
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 differences by PayPal in 2013—their outweigh their similarities. The better-suited platform for your company will help ensure your transactions are smooth, and that your customers actually follow through on their purchases. Here’s what you need to know about how to choose between Venmo and PayPal.
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. Venmo, on the other hand, 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 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 a credit card, debit card, prepaid cards and the ability 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
When you run an online business or an in-person business, having the ability 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 (eg, PayPal, Venmo and cryptocurrency): 3.49% plus $0.49 per transaction
In-person payments with a PayPal QR code: 1.90% plus $0.10 per transaction for transactions above $10.00
Online credit and debit card payments: 2.59% plus $0.49 per transaction
In-person card payments: 2.29% plus $0.09 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 US and selling tangible items.
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 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 through sharing a 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% cashback 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 Small and Medium Businesses
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 offering 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
$9.95 to $69.95
From 0.3% plus $0.08 per transaction
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. PayPal, on the other hand, allows up to eight users for an SMB business account.
Additionally, PayPal can facilitate international transfers, while Venmo is limited to the United States. 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: 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.
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 United States, use PayPal. Venmo is limited to US 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 US-based peer-to-peer payment platform while PayPal is the company better suited to process business transactions.