Here’s a scenario. You’re having dinner with your friends, and Bob picks up the bill. He isn’t doing it out of the kindness of his heart, though. He just doesn’t want to ask the waiter to split the check, and he expects you to pay him back quickly. But you don’t have any cash on you, what do you do?
You can make a peer-to-peer (P2P) payment with two different apps: Zelleor Venmo. For those who are unfamiliar, Zelle and Venmo are apps that allow users to send money from a linked bank account to another user’s bank account.
P2P payments are on the rise. According to NACHA, P2P payments increased by 670 percent during the first year of availability. That amounts to about 57 million transactions. Zelle and Venmo are pretty similar, but there are a few differences that could influence your decision between the two payment apps. Here is a breakdown.
|Account Balance||Use your bank account or debit card||Use your Venmo Balance or link to your bank account or debit card|
|Payment Options||Privately||Publicly or Privately|
|In App Purchases||No||Yes|
|Security||Uses authentication and monitoring features||Uses data encryption & allows you to lock the app on devices if stolen|
|Best For||Those interested in bank backed private payments||Those interested in making payments social|
Zelle vs. Venmo: The Similarities
On the surface, Venmo and Zelle are practically the same thing. Both are P2P payment networks. You use the network to send payments to anyone in the world, making it really easy to send money., As long as you know the recipient’s mobile phone number, email address, or app account name, you should be able to send money from your bank account to the recipient’s bank account. On top of that, you can also request money from people using either application.
Zelle and Venmo are both free to use, so you can send money without worrying about racking up fees with a debit card. However, Venmo does charge a 3 percent transaction fee if you use a credit card to send the payment. That means you need to stick with your debit card or bank account if you want to avoid fees using Venmo. The same cannot be said for Zelle who doesn’t charge any fees (not a similarity, we know).
Zelle vs. Venmo: The Differences
While the apps may be similar in some regards, there are also significant differences. You can explore the differences between Zelle and Venmo to decide which P2P payment app is best for you.
The biggest difference between the two apps has to do with how long it takes to process payments. It can take a day or two for Venmo payments to credit if you send them from your bank account. The system basically sends an electronic check, and it has to clear your bank before the funds are deposited into the other person’s account. Additionally, Venmo operates on business days, so a payment made on Saturday wouldn’t be processed until Monday. However, the recipient does receive a message as soon as you send the funds, so even though he or she doesn’t get the money immediately, the person knows it is coming.
If your friends simply can’t wait, though, you can benefit from Zelle. Venmo’s competitor is able to transfer money from one bank account to the next in a matter of minutes. That means you can finish up dinner at 7 p.m., and your buddy can receive the payment within minutes.
In order for transfers to be instantaneous, the financial institution has to partner with Zelle. Right now, Zelle works with a handful of institutions, including Bank of America, Capital One, Chase, US Bank, and Wells Fargo. It’s adding several more banks into the mix soon. You can still send money to a bank that the app hasn’t partnered with, but if you do that, it will take a day or two for it to arrive just like Venmo.
Accessing the App
You will also notice a big difference when it comes to accessing the app. In order to access the Zelle app, you need to bank with a financial institution that is partnered with Zelle. Then, you just need to download your bank’s application, and you can use the app accordingly.
If you use Venmo, you need to download the Venmo app without any worry whether your bank is partnered. Then, you can use it to send or receive money using your mobile device.
It’s also worth noting that Venmo includes a social component. You can use the app to say hi to your friends, and you can also add notes to your payments. This can add an extra layer to each transaction.