P2P transactions are electronic money transfers done directly between individuals, usually instantaneously. These payments are made through popular apps like Paypal, Venmo, and Zelle, eliminating the need for cash. However, choosing the best app for P2P payments can be a challenge. In this blog, we’ll help you find the answer.
Paypal is the original P2P payment transfer platform, established in 1998 as ‘Cofinity’ before being acquired by eBay in 2002. It later received the digital wallet company Xoom Corporation in 2005, expanding its user base.
Venmo, a subsidiary of Paypal, was created in 2009 by Andrew Kortina and Iqram Magdon-Ismail to enable quick money transfers. In 2012, Venmo was acquired by Braintree, which was subsequently purchased by Paypal in 2013. Therefore, Venmo is now owned by Paypal.
On the other hand, Zelle is a P2P payment app exclusive to the United States, launched in 2017. It is supported by several major US banks, including Bank of America, Wells Fargo, JP Morgan Chase, Capital One, US Bank, BB&T, and PNC Bank. Like Venmo, Zelle operates within the United States.
Let’s compare these apps based on the following:
i. Paypal, the oldest app in this guide, boasts 305 million users across 203 countries and facilitates fund transfers in 26 countries.
ii. Venmo is particularly popular among US millennials thanks to its interactive social media features. It also offers additional features like bill splitting, instant transfers, and seamless online payments to approved merchants. Venmo has approximately 40 million users.
iii. Zelle’s partnership with over 500 US financial institutions and its association with major American banks has increased in popularity. Zelle targets older generations and provides instant, convenient, and user-friendly services. It currently has around 27.4 million active users.
i. Paypal does not charge any fees for bank transfers, but there is a fee of $2.9 plus $0.30 per transaction when using a debit or credit card.
ii. On the other hand, Zelle is entirely free of charge for P2P payments, although any associated fees should be checked with your bank.
iii. Venmo charges 3% of each P2P transaction but offers free transfers if you can wait for funds to reach the recipient’s bank within 1-3 business days.
i. Transfer limits are essential, especially for frequent online transactions. Verified Paypal accounts have a limit of $10,000 for a single transaction. Unverified accounts have various limits for transfer methods (debit/credit/PayPal balance).
ii. Venmo sets a limit of $299.99 for unverified accounts and $4,999.99 weekly for verified accounts.
iii. Zelle has no specific limit; it varies depending on the bank. If you use Zelle, you must check your spending and transfer limits with your bank.
i. Since these apps involve financial transactions, they prioritize high-security standards and regularly update their systems. They use data encryption to safeguard customers’ confidential information. Paypal and Venmo provide second-layer authentication through a password or PIN for added security.
ii. Zelle, backed by major American banks, is considered the most secure application. Before initiating any transactions, double-check the banking details, as these apps facilitate instant transfers that cannot be reversed. If a transaction goes to the wrong bank account, no app can help you change it.
i. Paypal stands out for its extensive international network, allowing for funds to be transferred across 203 countries. With competitive exchange rates and speedy transfers, it is the go-to choice for international money transfers.
ii. However, Zelle and Venmo are limited to the United States and do not offer international transfer services.
All three apps excel in their ways as money transfer platforms. Each has its unique advantages that compensate for any shortcomings. If you require international transactions, PayPal is the ideal choice. Venmo or Zelle can meet your needs for domestic transfers within the United States. If you prefer an all-in-one payment app, PayPal is recommended.
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