In the digital age, there are many online payment and money transfer platforms. PayPal is one of the oldest electronic payment platforms. Some banks only started implementing online banking in recent years. There may be many e-payment options, some are more popular than others for many reasons. Examples of popular e-payment platforms include PayPal and Venmo. A popular question that normally gets asked regarding these two is “does PayPal own Venmo?”
Given that these two platforms are so widely used, and offer similar features, it’s only normal to wonder if Venmo is a subsidiary of PayPal. This is because PayPal is Venmo’s senior in the market. PayPal and Venmo are the two giants of digital money transfer platforms. They are so popular that users have taken the two proper nouns and converted them into verbs; examples of this are the phrases: “PayPal me.” and “Venmo me.” Venmo was first created back in 2009.
PayPal was first founded in 1998. The premise behind its design was for it to be a platform for people to easily send money to one another using email in addition to being able to make payments on eBay. Today PayPal’s user base stretches across 200 countries; it has a total of 393 million users. PayPal acquired Venmo back in 2012. The latter is a subsidiary of the former, even so, both these apps operate autonomously. This means that each product has its target audience and rules that govern the transactions that users can make. Just to clarify, Venmo is owned by PayPal.
What is PayPal?
PayPal is one of the oldest online platforms out there; it is a publically traded company. In addition to Venmo, PayPal owns other online companies/brands. These include Honey, Xoom, and Zettle. What makes it different from Venmo is that it is more of a business-to-customer (B2C) or customer-to-business (C2B) money transfer platform. PayPal’s main focus is to be an easy method of payment for both businesses and customers. Unlike its counterpart, PayPal is more of a payment platform than a money transfer tool. Businesses especially online businesses can make use of PayPal to easily get paid and also pay back customers in the event of a return. It is a globally recognized brand with 392 million users, it is available on Android, IOS, and online using a PC or laptop. Beyond the function that allows customers and businesses to make payments, PayPal also allows users to send money to friends and family.
What is venom?
This is a mobile platform with features almost identical to those of PayPal. Unlike its senior, this app is more of a person-to-person money transfer tool. Venmo focuses more on mobile users, via the mobile Venmo app. This app allows friends to easily send money to one another with barely any hassle. Like PayPal, it does have fees attached to some of the transactions that users make using the app. What makes Venmo unique is that it is also a social platform of sorts. Venmo to date has 65 million users, it aims to make sending money quick and also social.
Why PayPal bought Venmo-
Given that Venmo is still young but already bears similarities to its senior, there was a reason for PayPal to buy it. PayPal hopes to expand Venmo into merchant services. Simply put it sees Venmo as having the potential to be the next PayPal. The intent behind monetizing Venmo like the way it was monetized lies in its attempt to reach a younger demographic. PayPal seeks to turn Venmo into its second coming.
However, this acquisition did not come without any negatives. Some investors are concerned that the growth that Venmo will experience in the market may take away from the success that PayPal is and has been enjoying for several years now. To an extent is good news in the long run as Venmo’s manner of operating has fewer expenses attached to it even when customers make transactions from their venom account into a bank account.
Venmo & PayPal features
- Venmo allows you to send a request to someone as a type of reminder for them to pay you.
- Paypal on the other hand allows for money to be sent, but unlike Venmo, it doesn’t have a request feature.
- Transactions made on the apps take place almost instantly.
- Both apps allow users to transfer the money from their respective app balances into a linked bank account
- Both apps allow for free payments from a linked bank account in addition to a 3% charge for payments from a credit card.
- A key difference between the two is that Venmo also allows free payment from debit cards while PayPal only allows free payments from bank accounts.
- Both platforms allow free transfer of your funds into a linked business account for the standard period of one to three business days.
Engagement-
Venmo users are more engaged with the app than PayPal users, this is seen in the high number of transactions made using Venmo every week. Most of those payments are made in small amounts to friends. PayPal on the other hand has seen its users make one payment every 10-11 days. These PayPal payments are normally going to merchants. What this key difference in transactions means is that users are more likely to leave a balance in their Venmo app because they will be using it again soon
Conclusion-
PayPal bought Venmo in an attempt to maintain control of an ever-expanding market for digital transactions while still being able to grow steadily over some time. Many investors however are weary as Venmos seems to have adversely affected the profits. Looking long term it may still turn out to be a good purchase by PayPal.
Frequently asked questions
- Is PayPal still a good investment?
If you’re patient then in time the PayPal stocks could yet turn around and pay off in the long term.
- Which is better PayPal or Venmo?
Depending on what you’re trying to do either app will be suitable, for payments to merchants, the go-to is PayPal. If you’re making transactions with friends or family Venmo would be your best option.
- Can I withdraw my Venmo or PayPal funds at an ATM?
Yes, if you own a PayPal or Venmo debit card that is set up with your account. Venmo’s debit card allows you to make free withdrawals from MoneyPass ATMs.
