Peer-to-peer payment services, such as Zelle and Venmo, are popular and convenient ways to send and receive money with people you know. While Zelle and Venmo can both achieve the same thing – getting money from your bank account into someone else’s – there are some distinct differences between the two platforms.
Let’s take a closer look at these two peer-to-peer payment tools:
Zelle®
While Zelle® does not charge users to send or receive money over its platform, in some cases banks that offer Zelle do charge a fee for Zelle transactions. If you want to avoid a fee, choose a bank like Bank5 Connect that does not charge any fees to use Zelle. If Zelle is offered directly through your bank, you don’t need to download a separate app, set up a new account, or remember a new password in order to use it. If your bank offers Zelle, you can usually register for the service with a few clicks right through your online banking account. Once registered, you can send money to friends and family by entering their email address or phone number. Payments are usually sent within minutes through Zelle. If your bank doesn’t offer Zelle you can still use the service by downloading the Zelle mobile app, but your transactions will be limited to $500 a week.
Venmo
Unlike Zelle, Venmo is not available directly through banks. It is a standalone payment app, and you must create an account in order to use it. Once your account is set up, you can link it to a debit card, bank account, or credit card, and can use any of those payment methods to send money. Unlike Zelle, where the money you receive goes directly into your bank account, Venmo is essentially a digital wallet, and holds money for you. When you receive payments from other individuals, that money is stored in your Venmo account. You can transfer your Venmo balance to a bank account or use it to send future payments. With Venmo, you can only send and receive money with other Venmo users. Once money is sent on Venmo it should appear in the recipient’s Venmo balance immediately. However, it can take up to three business days to transfer that money from your Venmo balance to your bank account. Venmo does offer faster bank transfers, but there are fees associated.
Zelle vs. Venmo – Which option is better?
While both Zelle and Venmo can be convenient ways to send money to friends and family, Zelle does have some distinct advantages over Venmo:
- FDIC Insured: Because Zelle deposits money directly into your bank account, the funds are FDIC insured, as long as your account is with an FDIC-insured bank (credit unions aren’t covered by FDIC insurance, but typically are similarly insured through the National Credit Union Administration (NCUA). With Venmo on the other hand, funds you receive are initially deposited into your Venmo account, which is not insured.
- More Straightforward Process for Unauthorized Activity: Because Zelle transactions are considered bank transactions, unauthorized transactions made from your Zelle account without your permission would typically be considered bank fraud and be covered under bank account fraud policies. You would want to contact your bank immediately if you suspect any fraudulent activity stemming from Zelle. With Venmo on the other hand, unraveling fraud could be a bit more tricky, due to the number of payment options available through the service. If someone gains unauthorized access to your Venmo account they could potentially rack up unauthorized charges on any credit cards, debit cards, or bank accounts linked to it. They could also potentially deplete your Venmo balance. This would result in you having to dispute the fraudulent activity with your bank, credit card provider, and Venmo.
- Less Chance of Sending Money to the Wrong Person: When sending money to someone on Venmo, you typically search for them by their name or their Venmo username. This can become pretty confusing if there are many Venmo users with the same or similar name, and you could inadvertently send money to the wrong person. Venmo does allow you search by email address or phone number as well, but it will only pull up the recipient’s profile if the same email address or phone number is specified on their account. With Zelle, you can initiate a payment to someone by entering their email address or phone number. If that email or phone number is tied to an existing Zelle profile, the money will be sent directly to the bank account they’ve specified with Zelle. Otherwise, the recipient will receive a text message or email with instructions on how to receive their payment.
- Can Send Money to Anyone. With Venmo, you can only send money to other Venmo users, but with Zelle you can send money to anyone. If they don’t yet have a Zelle account they will receive instructions on how to enroll and receive their payment.
No matter what your favorite peer-to-peer payment platform is, what matters the most is that you use it wisely. Only send money to people you know, protect your account with a strong password and multi-factor authentication, and check your account regularly for suspicious activity. You should also always be on the lookout for scams. If you receive an unexpected email or text message requesting an immediate payment through Zelle or Venmo, you should be suspicious.
If you’re a Bank5 Connect customer and interested in using Zelle, you can learn more here: https://www.bank5connect.com/zelle