Paypal and its subsidiary Veno are huge players in the digital wallet game. Paypal has a long-standing trustworthy reputation that stems all the way back to when Ebay was top of its game and Paypal was the best and only way to pay. Venmo is the latest and greatest in new digital wallet apps that is increasingly more popular for Millennials and beyond, so much so, that ‘to Venmo’ is now a coined phase. This article looks into the differences between Paypal and Venmo and which platform wins in the digital wallet landscape.
The History of Digital Wallets
Paypal was founded in 1998 and is the first widely known digital wallet available. eBay was fast to purchase the Paypal product and Paypal became a huge income driver for the popular auction site. Since then Paypal’s popularity has gone from strength to strength.
In 2009, two entrepreneurs, Andrew Kortina and Iqram Magdon-Ismail were stuck in a situation where they needed to send money to one another quickly and easily. From this dilemma, Venmo was born and in 2012 Venmo was purchased by Braintree that was later acquired by Paypal in 2013.
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Venmo combines a digital wallet with a social media feed by asking for comments on each transaction that are then displayed in a newsfeed-style for other friends on the app to browse. The comment feature was added to encourage people to leave fun messages, amusing stories and jokes to their friends whilst paying them back.
This is the key to Venmo’s success – it is a friend focused digital wallet that, as they described themselves, is ‘designed for payments between friends and people who trust each other.”
Venmo is entirely free and the company presently reports zero revenue, however it has helped to extend the reach of Paypal, now bringing in a revenue of $7.9 billion. Venmo transactions are instantaneous and cannot be undone and if you accidently pay the wrong person, you have to ask politely for the money back.
Venmo vs. Paypal?
It is difficult to compare Venmo and Paypal mainly because Venmo offers one service, however Paypal has diversified into several other financial products and could arguably be compared to a bank as well as a digital wallet app.
Paypal doesn’t just offer services in payments anymore but has branched out to offer financing for larger purchases, lines of credit and a Mastercard for users wishing to purchase things in shops using their Paypal account. Paypal has built such a reliable reputation over the years that businesses around the world accept Paypal for goods or services.
Venmo, on the other hand, provides one service that it is really good at. You can pay your friend back for dinner, the movies or a drink. You cannot pay your electricity bill using Venmo, but you can send you family money for that cruise you are going on next summer, or your work colleague money for their honeymoon.
The obvious difference between the two products is price. Venmo is free for users transferring using a debit card transaction. Those using a credit card will be subject to a 3% charge. Paypal charges 2.9% + $0.30 for payments from debit and credit cards but it is free from Paypal to Paypal account.
Venmo is managed using mobile phone numbers whereas Paypal uses email. Also Venmo arguably has a much better user experience than Paypal, however Paypal is updating its system all the time, so this could be a temporary difference.
In conclusion, it would seem to many that Venmo is superior in terms of a digital wallet with a great UX, free service and speed of transfer. However, Paypal appears to still be the father of online finances with an array of additional services and a history of reliability and trust. Of course, with Venmo being the subsidiary of Paypal, only Paypal wins.
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