Paypal or Venmo — Which is Better?

Paypal or Venmo?

I was in a favorite buy/sell groups this morning when a recurrent discussion was launched. "I have a question for sellers who use PayPal. Do you pay a fee per transaction? Is Venmo better?"

I know why this question always pops up. Have you seen the terms and conditions on PayPal? To say it's lengthy is an understatement.

If you're serious about your money and want to get the most from your payment platforms (hey, that describes me), not only have you seen the terms and conditions, you've actually READ them (also me).

If all that legalese is enough to turn you off from selling online, don't fret. You can find all the important terms & conditions content with a quick Google search. Or keep scrolling. I've researched the most common questions about using PayPal and Venmo for you.

To get the most from this informative post, you need to understand PayPal's two types of payment; Friends and Family and Goods and Services. Let's dive in.

*The specific details and percentage amounts that follow come from Paypal.com and Venmo.com. The remaining content is this writer's opinion only and should never be construed as financial advice. It is the reader's responsibility to be educated in the use of the services described below.

Friends and Family

If you need to repay a friend or family member for lunch, your share of a gift, your contribution to the office Christmas party, or if your college student needs cash fast, Paypal's friends and family option lets you send money immediately and without fees, so long as the following applies:

• PayPal Balance: You're using funds already in your PayPal account.

• Linked Bank Account: You're transferring directly from your checking or savings account.

Fees will apply when:

• Debit or Credit Card: If you use funds from a debit or credit card, a fee of approximately 2.9% plus a fixed fee (e.g., $0.30 USD for USD transactions) is charged to the sender.

International Payments:

• Higher Fees: International Friends & Family payments usually cost more, even from a bank account, with additional percentage fees and currency conversion spreads.

Goods and Services

Buyers must choose the G&S option to enact coverage that provides refunds for eligible online purchases that fail to arrive or don't match the listing description. The program covers tangible items, some digital goods, and even certain intangibles, but exclusions apply.

What's Covered (Examples):

• Items Not Received: If your eligible online purchase never shows up.

• Items Not As Described: If the item arrives damaged, is fake, or missing major parts.

• Tangible Goods: Physical items like electronics, clothing, household goods, and even some custom items.

• Digital Goods & Intangibles: Some digital items, tickets, and services (with specific conditions).

• What's Not Covered (Examples):

  • Real estate, vehicles, and some investments.

  • Gold, gambling, and certain business-related transactions.

Buyers can open a dispute within 180 days if issues arise. 6 months beyond purchase date.

PayPal goods and services option charges a fee to the SELLER.

• Standard Domestic Fee: Around 2.99% + $0.49 USD per transaction for online sales, deducted from the payment received.

• International Payments: Additional fees apply, including a percentage for currency conversion

• Micropayments: Lower rates for small transactions (e.g., under $12).

• High-Volume Discounts: Lower rates are available for large sellers.

PayPal Friends & Family payments do not protect buyers. This option is for gifts or money transfers to people you know and trust. You can't open disputes for "item not received" or "significantly not as described" issues, making 'friends and family' risky for online purchases. Using Friends & Family for purchases is against PayPal's rules and can lead to account limitations.

Only PayPal Goods and Services (G&S) protects buyers through its Purchase Protection Program.

Do friends and family payments provide buyer protection?

Do Paypal invoices make a difference?

There are some buy/sell groups that require PayPal invoices for every transaction, incorrectly believing a Paypal invoice is the only way to insure against scammers.

PayPal invoices makes Goods & Services the default option rather than leaving it up to the purchaser to select. In that way, invoices do add another level of protection. Invoices also provide the seller a record of the items sold in the event of a dispute. A seller can also add the shipment tracking number to the invoice and PayPal will update the buyer with this information.

The downside to PayPal invoicing is the option is only available to PayPal business accounts. If you're using your personal PayPal account to sell excess fabric (excess fabric, like leftover wine... is there such a thing?) you'll need to instruct your buyer to choose Goods & Services when paying you. If they don't? No harm to you really. As a matter of fact you won't be charged any fees. And this is why insisting on the Friends and Family option is a popular gimmick with scammers.

I believe you'll get more sales if you can assure your customers that you offer buyer protection through your payment platform. GO the extra to make it clear they should choose goods and services if you don't have a PayPal business account.

If you're sincere about doing business with integrity, you'll go the extra to explain the need for the goods and services option. You'll also want to note tracking numbers if you're shipping items.

Which option protects sellers?

PayPal Seller Protection program protects your business and eligible sales from potential loss due to chargebacks, disputes, payment reversals, unauthorized transactions, and fraudulent claims. All merchants have to do is provide sufficient evidence against these complaints to receive a full refund on the eligible amount from PayPal as long as you meet eligibility requirements. This may mean you'll need to build a filing system to help you keep track of items sold, payments received, packages shipped and carrier tracking numbers at minimum. Your orders should be filed by date or customer's last name, making them easy to locate should you find yourself in a dispute.

What about Venmo?

I read a lot of negative comments about Venmo. It has an unfounded reputation of being a tool exclusive to scammers. I couldn't disagree more.

Here are some commonly overlooked features of Venmo:

Venmo is PayPal. They are the same company. Two similar vehicles built for different user needs.

Venmo DOES offer buyer protection. Just as with PayPal, the purchaser will need to select goods and services to make the transaction eligible for buyer protection. Unless you purchase from a business account. When you buy from a Venmo business account, goods and services is the default option just like a PayPal invoice would. Venmo doesn't allow for you to create invoices on the app, but you can create invoices in Word or Google Doc that include your Venmo address for sending payment.

Venmo also charges the seller a fee:

• Standard Business Profile: 1.9% + $0.10 per transaction (automatically deducted).

• Personal Account (with Purchase Protection): 2.99% per transaction.

• For payments via Tap to Pay: 2.29% + $0.09 (for business/charity).

So which is better?

Which is better for online selling, Paypal or Venmo?

Why not both?! The similarities between PayPal and Venmo are enough that I believe you could become comfortable using both, allowing you to meet your customer base where they are and reaching a broader audience (translation: more sales!).

Boldly make claims that you ONLY use goods and services because you want to offer your customers peace of mind through buyer protection programs. PayPal and Venmo both have tools for on site sales too, like craft shows and flea markets. There are a myriad of things to consider when asking which is best for you. Least of which is the fees. By using Venmo I can save 1% of every transaction. That adds up.

Do your due diligence. Don't take my word for anything. This post will age like milk because I'm not going to keep up with every PayPal and Venmo policy and fee change. It's up to you to know what you're getting into before you click YES, I AGREE to the Terms and Services clause.

If you're looking for a new buy/sell group where you can sell your excess fabric (excess fabric is like leftover wine. Is there such a thing?) you're welcome to post in my Stash Market.

Best of luck! Congratulations on your new business!

Wrapping it up