Technology has many things easier, especially transferring money. Two of the most popular payment providers out there are Zelle and Venmo, but each has its own strengths and weaknesses. In the Zelle vs. Venmo competition, who do you think would win?
Thanks to money apps like Zelle and Venmo, you can send and receive money from the comfort of your home without getting cash, going to the bank, or writing a check. When you think about splitting lunch or traveling costs with someone, Zelle and Venmo are convenient apps to use.
Peer-to-Peer Payment Service
Zelle and Venmo are both peer-to-peer (P2P) payment systems because they enable you to send money from one device through a linked bank account or card. Other free P2P money apps that do this are Paypal and CashApp.
Say you are out at dinner with a friend, and you want to split the bill. Rather than you both pulling out cards or cash, one of you can pay for the check, and the other can send money through the app. It's that simple. So now let's get into the juicy details about Zelle and Venmo.
What is Zelle?
Zelle is a digital payment network that most mobile banking apps already have. Early Warning Services, a private financial service owned by America's biggest banks like JPMorgan and Bank of America, owns Zelle. It is only available to residents of the United States. Zelle makes sending money very simple without going to the bank or dealing with in-pocket cash.
Zelle already comes installed in over 25 banking apps including Bank of America, Chase, and Capital One. How does it work, you might wonder? You log in to your bank account and sign up under the Zelle tab. Once you have Zelle, you can sync your contacts to send money to the other party. The best part about Zelle is that you can send money with the other person's phone number or email address.
Zelle has grown in popularity in recent years. In 2016, Zelle processed 56 billion payments in total. In the first quarter of 2021 alone, it processed 106 billion.
When you send money to another party, they will receive a text message or email. Sending money through Zelle can take a few seconds to a few minutes. When you receive money, it is already in your bank account. It is as easy as 1, 2, 3!
When it comes to Zelle, there are many advantages.
- Free to use
- Sending money is quick and easy
- Money is sent directly to your bank account
- No need to get the recipient's banking information
- No need to worry about having a check or cash on you
- Only an email or phone number is needed to send money
However, there are some disadvantages of Zelle too.
- You can't cancel payments after you send the money
- You can't link Zelle to a U.S. banking account because certain mobile banking apps have Zelle integrated already
- No fraud protection
- Supports U.S. banks only
- Cannot transfer funds from a credit card
What is Venmo?
Venmo is also a P2P money transfer service. It makes the transmission of funds between the sender and recipient seamless and quick.
It predates Zelle, having been established in 2009 by college roommates Andrew Kortina and Iqram Magdon-Ismail. However, it did not become the P2P platform we know now until 2012. That was the start of what many people now know as Venmo. Its user base has ballooned since.
In 2019, Venmo processed 102 billion dollars. In 2020, it surpassed 159 billion dollars. This increase can be attributed to the pandemic, highlighting the significance of being cashless and the value of having a money transfer tool on your phone.
How does it work? The first step is downloading the app from either the App Store or Google Play. You then need to link Venmo to your bank account. After that, you can connect with other Venmo users by getting their usernames. With their usernames, you can send money to them.
When you send the payments, it goes to the user's Venmo account instead of their bank account. They can send it to their account after receiving the payment.
Users can also utilize Venmo by paying or requesting payments from other users. They can input the payer or recipient's email address, username, or phone number. You can transfer it to your bank or leave it in your Venmo account when someone sends money over. When you leave it in your Venmo account, you can always use that money to send to other people down the road.
It is a free app to use, like Zelle. However, there are fees for quickly transferring money to your bank account or using a credit card. When you use a credit card, there is a 3% fee because a credit card company initiates the transaction, and Venmo acts as a conduit for the consumer.
Here are some benefits to using Venmo:
- Quick and convenient payments
- Send money from a bank account or debit card at no cost
- You can pay for purchases at selected businesses
- Offers credit card and debit cards to users
There are some drawbacks too, and these include:
- Payments are public by default
- Once initiated, you cannot cancel payments
- It does not support the transfer of funds from abroad
- A small fee when using the credit card
- Popular with scammers
How Secure are Zelle and Venmo?
Let's see how the platforms compare in terms of security.
Security for Zelle
Major banks in the United States developed Zelle and used encrypted data to increase the security of Zelle consumers. As a result, scammers find it incredibly difficult to obtain valuable information on it, making it safer than other P2P systems like CashApp.
One significant disadvantage of Zelle is that you can't reverse a transaction. Suppose you make a purchase, but you don't get what you paid for. In that case, Zelle cannot block the transfer or return your money.
You should only use Zelle with people you know and trust. Even with the system designed to keep scammers out, it cannot determine whom you should trust and avoid. Whenever you have doubts, remember to double-check everything at all costs.
Security for Venmo
Like Zelle, Venmo also encrypted data to protect users' information from other parties. Users can log out of a phone and provide password pins for additional security if stolen.
That hasn't stopped hackers and scammers from taking money from people through deceptive tactics, though. They frequently reroute the email associated with the account, preventing the user from getting transaction emails until the funds in their Venmo account have transferred out.
The Difference Between Zelle and Venmo
When comparing Zelle vs. Venmo, the only key difference is that Zelle is a faster payment service than Venmo. Since you can access Zelle through the banking app, it is convenient for people to send money right away into a bank account instead of a stand-alone app.
With Zelle, you can receive your money within minutes in your bank account. It can take up to three business days for your money to arrive in your bank account when using Venmo.
Which One Is More Popular
Venmo has been around for more than a decade, which helped it gain popularity in the United States. In addition, due to its status as a Paypal subsidiary, it had access to shopping platforms such as eBay and was used by eBay sellers. It has also become a popular platform, especially among Gen Z.
Who is the Winner?
There are no winners or losers in the competition of Zelle vs. Venmo because both platforms are convenient and effective in P2P transactions. They both have their pros and cons and work similarly to one another.
It is up to each individual user to decide which one they prefer.
With the help of Zelle and Venmo, people's lives have become much easier than before. There is no need to run to the bank or write a check. Using one of these platforms is almost necessary for one's daily life. If you forget your card or cash at home, you will always have your phone. Who doesn't want to send or receive money in seconds or minutes?
This article originally appeared on Wealth of Geeks.
Cindy started her blog, The Money Dreamer, when she realized the 9-5 job was not the lifestyle she wanted anymore. After designing for a while, she wanted a more meaningful life, so she decided to venture out. She took action and decided to learn how to save, budget, and invest while helping others along the way.