Zelle vs Venmo - What are the differences?

TransferWise
03.30.20
7 minute read

If you’ve made or received a payment from a friend or family member recently, you may have used Zelle or Venmo already. These services allow users to send and receive domestic personal payments easily, with just an email address or phone number needed to set up a payment.

However, the services are different, with some variations in fees and features that are worth knowing about. Read on for more about Zelle vs. Venmo, including how to get started, what you can do through these providers, and more. We’ll also briefly cover an alternative provider - TransferWise.

Table of contents:
TransferWise lets you make low-cost international payments, hold a balance in 40+ currencies, and get a multi-currency mastercard with no foreign transaction fees. Plus you’ll get the mid-market rate on all transactions. Take a look and see if you can save today.

Zelle vs Venmo: Key differences

Both Zelle and Venmo can be used by US customers to send and receive domestic payments.

Zelle is free to use, although you’ll need to check your own bank or credit union won’t charge a fee. Zelle payments are sent directly from your linked bank account or card, to your recipient’s linked account or card. Venmo provides a digital wallet, which you’ll fund from a linked US bank account, credit, debit or prepaid card. You can then make payments to Venmo users. Many Venmo transfers are fee free, but there are charges for some transactions.

Here are a couple of key differences between the services:

  • Zelle is a gateway service which allows you to send and receive - but not hold - funds. Venmo has a wallet function so you can hold a balance.

  • If your bank allows Zelle payments you can use it with your regular online banking app - Venmo users will need a separate app to make payments.

  • Zelle payments are typically available within minutes, with no charge from Zelle. Venmo standard transfers are free but take longer, while instant transfers come with a 1% fee.

  • Venmo works only with a small number of authorized merchants, and doesn’t offer business accounts as standard. You may be able to use Zelle for your small business if your bank or credit union allows you to.

TransferWise allows businesses to make low-cost payments across the world for low fees, using the mid-market exchange rate. You could save up to 19x compared to PayPal, so why not take a look, today.

Zelle overview

Zelle is an electronic funds transfer service which works with many large US banks to let users send payments to friends and family easily.²

All you need is the phone number or email of the person you want to pay, which makes it simple to cover your share of a drinks bill, or split the cost of groceries, without needing to check and input account and routing numbers.

Getting started with Zelle is straightforward.³ If your normal bank offers Zelle payments already, you’ll just need to log into your online banking service and select Zelle there. If your bank or credit union doesn’t provide Zelle as an option, you can still use it by downloading the Zelle app and registering an account.

If you receive a payment through Zelle and don’t have an active account yet, you’ll be prompted to open one to get your money.⁴

Zelle fees

Zelle doesn’t charge a fee for its payment service. However, you’re advised to check with your bank or credit union to see if they add a fee for Zelle payments.⁵

Zelle money transfer speed

If you’re sending a payment to someone who is already registered with Zelle, it should arrive in just a few minutes. However, if your recipient doesn’t have an account yet, they must set one up to get their payment. If they don’t open a Zelle account within 14 days of the payment being made, it will be cancelled and the money returned to you.

Is Zelle safe?

Zelle takes steps to make sure your personal details and your money are secure, including authorization before payments are made, and monitoring for fraud. ⁶

Lacking features

There are a couple of downsides to Zelle that are worth knowing about. Zelle doesn’t have a digital wallet in the same way that Venmo does, so you can’t hold your money in your account for later. Also, if you receive a payment, you’ll need to set up Zelle before you can receive your money.

International payments can also be an issue. Zelle offers a simple way to send payments to friends and family in the US. However, you can’t make transfers to people who are abroad, which can be a problem if you want to remit money to a family member overseas, or split the costs of a trip with a friend in another country.

If you’re looking for a convenient and cheap way to send money abroad, check out currency specialist TransferWise. You can get a multi-currency account online, to hold dozens of different currencies, and switch between them using the mid-market exchange rate. Manage your money with the award winning TransferWise app, and you could save time as well as money compared to using your regular bank for cross border payments.

Venmo overview

Venmo users can send and share payments, and use their Venmo account to buy things online from approved merchants.⁷

To use Venmo you must be in the US, and have a US registered mobile phone. You’ll open a Venmo account by following the Getting Started checklist.[8] Complete your personal details and phone number, and link a credit, debit or prepaid card, or your normal bank account to send a Venmo payment.

If someone sends you money through Venmo, you’ll be prompted to set up an account to access it.

Money can be held in your Venmo digital wallet, spent online with authorized retailers, or transferred out to your normal bank account or card.⁹

One of Venmo’s unique features is that users can send a message - complete with emojis - when they make a payment to a friend or family member. This message becomes visible to your network on your Venmo news feed, giving a social angle to the experience of splitting a restaurant bill, or sending a birthday gift.

Venmo fees

There are a few fees you’ll want to know about before you start using Venmo. Here’s a rundown of the most important.

Service Venmo fee[10]
Account opening Free
Monthly service charge Free
Sending money to people in the US Funded by Venmo balance/ debit card or bank - Free Funded by credit card - 3% Using the Venmo purchase program - 3%
Sending money to people internationally Not available
Withdrawing money to your bank account Standard transfer - Free Instant transfer - 1% (Minimum $0.25 to $10 maximum)
Get a linked card Free
ATM withdrawal MoneyPass network - Free Out of network ATMs - $2.50

Venmo money transfer speed

If you set up a transfer with Venmo you can choose a standard bank transfer or instant transfer. [11]

Standard transfers are free, but take 1 to 3 business days. If you set up the payments during normal business hours on a weekday, the payment could arrive by the next working day. However, if you process a payment after hours, at a weekend of public holiday, it won’t be sent until the next business day which could result in a delay.[12]

Instant transfers are available 24 hours a day, and should arrive in 30 minutes. You’ll pay a fee of 1%, from $0.25 to a $10 maximum charge for this service.

Is Venmo safe?

Venmo uses encryption to keep your details safe, and monitors all transactions for anything which looks suspicious or which could indicate fraud. If you want, you can also add a PIN to your phone to add extra security. If you lose your phone or believe it’s been compromised, you can disconnect the phone from your Venmo account to stop anyone abusing it.[13]

Lacking features

Before you choose Venmo, you’ll want to check the specific features you need are available. For example, Venmo doesn’t work with businesses as a standard, choosing instead to partner with only a small number of authorized merchants to accept payments[14]. You may also pay a fee for the service you need.

It’s worth noting that you can only use Venmo if you are in the US and have a US registered mobile phone. If you’re overseas, or if you want to make a payment to someone abroad, you’ll need an alternative.

If that sounds like you, check out TransferWise for a multi-currency account which lets you hold, send and spend in 40+ currencies.

Depending on your requirements, you may be best off with Venmo, Zelle, or a specialist alternative provider like TransferWise. Do a little research before you choose the right payment platform for you, to make sure you get the best deal out there.


Sources:

  1. I'm a Small Business Using Zelle®
  2. Zelle - How It Works
  3. Zelle - How do I get started?
  4. Zelle - What if the person I'm sending money to hasn't enrolled with Zelle®?
  5. Zelle - Are there any fees to send money using Zelle®?
  6. Zelle - Is my information secure?
  7. Venmo - Share Payments
  8. Venmo - Signing Up - FAQ
  9. Venmo - About - Product
  10. Venmo
  11. Venmo - Instant Transfers FAQ
  12. Venmo - Bank Transfer Timeline
  13. Venmo - Security
  14. Venmo - General Business & Partnership Inquiries

All sources last checked 24 March 2020


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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