In this fast-paced, technology-driven world, consumers expect every aspect of online shopping to be quick and easy. That’s why it’s crucial for eCommerce retailers to offer great payment options on their online stores. There are many digital payment services available today, all of which make payments easier for both consumers and retailers. These include PayPal, Apple Pay, Google Pay, AliPay, and Venmo. In this article, we want to break down the Venmo VS PayPal debate to see which might be more suitable for your business.
Imagine that a customer has taken the time to go through all the products on your website and then can’t complete the checkout process. You can practically feel the frustration of not being able to pay for the goods they want and then giving up and leaving your site without making a purchase. For the most part, credit or debit card payments are fine for online stores. But sometimes, these don’t work properly - for absolutely no reason. That’s where digital services like Venmo and PayPal can be useful. These digital wallets make online payments easier, more convenient, and practically infallible.
From an eCommerce perspective, offering a variety of payment options is a good business practice. By offering more options, you have a higher chance of reaching a wider customer base.
Are Venmo and PayPal the Same?
PayPal acquired Venmo (and Braintree) for US$800 million in 2014. That means both payment services are owned by the same company. But it doesn’t follow that they are exactly the same.Think of this as siblings. They come from the same family, but they have different characteristics and personalities. Venmo is more popular with Millennials as it’s a fun service that allows them to easily send and receive money. But because it’s more used as a money transfer app, it acts almost as a complement to PayPal’s service.
How are PayPal and Venmo Similar?
This debate can be tricky because the two platforms are - at least on the surface - very similar. At their cores, both offer users the ability to make payments or cash transfers digitally. Here are a few of the similarities between the two platforms:
- Both are digital wallets that are used for online payments
- You can create free accounts on both services
- Both can be connected to you bank accounts
- You can transfer money to friends with both
- Both services can be used by iPhone and Android users
What’s the Difference Between PayPal and Venmo?
While the basic function of both the services is the same, there are some important differences as well. These will help you decide which service is better for your business:
- Fees: While you can create free accounts with both services, you may have to pay fees, depending on which one you use. That’s why Venmo Vs PayPal fees is a crucial part of the debate. Since PayPal is subscription-based, they charge $5/month for their basic package plus 2.9% and $0.30 per transaction. Venmo doesn’t use a subscription model, so it’s free to use. However, it charges 3% for every credit card transaction and $0.25 to transfer your balance to your bank account.
- Transfer Limits: This is a key concern in the Venmo VS PayPal debate. Venmo has a daily transfer limit of $3,000; PayPal’s limit is $10,000. That’s because Venmo is usually used for personal day-to-day transfers while PayPal is also used for business transactions.
- Social Networking: Venmo made its name through social networks. It created a community for users by asking them to follow their friends and contacts. You can also send emojis and messages while making transactions. PayPal doesn’t offer these options.
- Security: This is a huge concern for any financial transaction, especially one made digitally. Both services offer great security and use the same encryption mechanism. They also send OTP to users to confirm transactions. However, Venmo requires you to register before sending money while PayPal doesn’t. Similarly, PayPal ensures that your personal and bank details aren’t seen by the recipient. In addition, transactions on Venmo can easily be seen by users you interact with. As you can see, it’s important to consider the Venmo vs PayPal security implications.
- User Base: This is another key difference between both services. Venmo is only available to American users. However, PayPal can be used in 200 countries. For this reason, PayPal is better for businesses that operate on a global scale.
- Business Features: PayPal has many enterprise features to help you track and organize your store’s finances in a package called “Business in a Box.” The platform also offers options like PayPal Business Loan and PayPal Working Capital and supports POS, credit transactions, and mobile card readers. Conversely, Venmo doesn’t offer any of these facilities.
What Are The Benefits of Each System?
Now that we know the similarity and difference between PayPal and Venmo, it is easier to understand the benefits of each system.
- Easy to use
- Free to create an account
- Available to both both iPhone and Android users
- Secure and safe
- Easy to add bank accounts
- Quick way to send money to friends and family
- You can follow friends and contacts and send messages
- Easy to use
- Both iPhone and Android users can download
- Very secure
- Available in 200 countries
- Offers business solutions
- Offers rebates and discounts for loyal customers
- Transactions can be recorded for bookkeeping
- You just need an email address to set up a PayPal account
What Are The Drawbacks of Each System?
Of course, all things come with a down side. Venmo and PayPal both have a few features that may be considered drawbacks for your business. Here’s what you should consider:
- You can only send up to $300
- Most businesses don’t offer Venmo payments
- To send payments, both parties must have a Venmo account
- Only available in the US
- You require a valid telephone number to get an account
- You pay a fee to receive payments.
- PayPal has an automated system to freeze accounts without warning if they suspect suspicious activity.
- Some banks charge extra fees to transfer money from PayPal
- Because it’s popular, it’s subject to scams and phishing.
Is PayPal or Venmo Better For Me?
In this article, we’ve tried to outline pertinent issues in the battle for digital payments. Hopefully, these will help you decide which platform will suit your business. If you’re a small or medium eCommerce business that sells to international destinations, then you will want to use PayPal. However, if you only trade in small payments and within the US, then Venmo might be more suitable. Many eCommerce platforms now offer the ability to offer Venmo and PayPal payments - and, Easyship integrates with many of these, including Shopify and WooCommerce!