Payment tools make it fast and easy to send money peer-to-peer or person-to-business. You can send money to someone else with just a click or tap. Or, you can receive money from friends, family, or clients. PayPal, Venmo, and Zelle are the most popular payment systems available. But what are the differences between them?

As the number of options grows, it’s hard to know which payment system is best. Are they all the same? In this article, I’ll explain how PayPal, Venmo, and Zelle work. In addition, I’ll explain the pros and cons of each for personal and business use. Then, you can decide which of these systems is right for you.


paypalLaunched in 1999, PayPal is one of the most popular payment tools today. eBay purchased PayPal in 2002, quickly gaining wide success in the online auction marketplace. In 2014, PayPal spun off as a wholly independent company.

PayPal is available in more than 200 countries and supports 25 different currencies. It’s used to send money from person to person or to process business payments. 

How PayPal Works

You can set up a free PayPal account from any desktop or mobile device. Once your account is set up, you can send and receive payments online. When you receive money, your PayPal account will hold the funds until you request a transfer to your bank account.

There are two options when making PayPal payments. You can use the balance in your PayPal account. Or, you can automatically transfer the amount needed from your connected bank account.

Using PayPal in Your Business

PayPal offers Personal and Business accounts. Setting up a PayPal business account is free, but you will pay fees for business transactions. 

Pros of PayPal:

Cons of PayPal:

  • 1% transaction fee for instant transfer to your bank account
  • Standard transfers are free but can take 3-5 days
  • They can freeze your funds at any time if they think you have done something wrong
  • Fees associated with chargebacks are high
  • It’s not easy to get a support person on the phone. 


venmoVenmo is a mobile payment service that was launched in 2009. It’s mainly designed for peer-to-peer payments. In general, it’s more popular among millennials who use it to split bills and send money to friends. In many ways, it works similarly to PayPal. 

How Venmo Works

When you open up a free Venmo account, you’ll get a unique username, which you’ll use to send/receive money. You’ll need to connect your Venmo account to your bank account(s) and/or credit card accounts. 

You can use your Venmo balance or another connected account (banking or credit/debit card) when you pay someone. Like PayPal, the money you receive via Venmo will sit in your Venmo account until you request a transfer to your bank account.

Using Venmo in Your Business

Venmo is available for use in your business to send and receive payments. However, you must set up a Venmo business profile first. The fees associated with using Venmo for your business are  1.9% of the transaction + $0.10.

Pros of  Venmo:

  • No fees to send or receive money for personal use
  • Venmo app is easy to use and has the feel of social media
  • Your business account is linked to your personal account (there’s only one login for both, but transactions are tracked separately.)

Cons of  Venmo:

  • Transactions are “public” by default (privacy concern)
  • Only available for use in the United States
  • Not a good option for business transactions
  • Like PayPal, Venmo charges a fee for ‘instant’ cash-out bank transfers
  • There is no buyer/seller protection (you can’t cancel a transaction)


zelleZelle is a newer payment processing system than PayPal or Venmo but has grown rapidly over the last six years. It is unique because it’s owned by seven major U.S. banks – Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, and Wells Fargo. As a result, Zelle is top-notch in security and credibility. 

Zelle is mainly designed for peer-to-peer payments, as opposed to business transactions. Users can send money to friends/family who are also Zelle users via their bank account or the Zelle app.

How Zelle Works

There are a couple of major differences between Zelle and PayPal or Venmo. First, since Zelle is already a part of many banking apps, you do not need to create a separate Zelle account or download a separate Zelle app. You can send money via Zelle through your bank app.

If your bank does not offer Zelle, download the Zelle app and sign up. From the app, specify the payment recipient (by either their email address or U.S. mobile phone number) and the amount to send. If the recipient isn’t enrolled in Zelle, they will receive a message with instructions on receiving the money. 

Using Zelle in Your Business

For business transactions, check whether your business banking institution offers Zelle and any associated fees. 

Pros of Zelle:

  • Available in over 2,100 banking systems. View the list of partner banks/credit unions at
  • No fee to send and receive money between friends and family via Zelle
  • Zelle uses top-notch security to protect the transaction
  • Funds are available immediately if both banks have Zelle
  • The money isn’t held in a Zelle account, like with PayPal and Venmo. 

Cons of Zelle:


PayPal, Venmo, and Zelle are all reputable, fast, and affordable payment processing options. While similar in many ways, there are distinct differences between them. Each has pros and cons, depending on your purpose and priorities.

Now, PayPal is the best choice if you sell products or services from your website. However, these service providers constantly change their features, rules, and fees. Venmo and Zelle will likely become more business-friendly in the near future. When you choose a payment processing system, do your due diligence and select what works best for you and your business.

I’d love to hear about your experience with online payment processing systems! Do you have another one that you like to use regularly?

(Originally Published October 2021; Updated November 2023)

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