Zelle Vs. Venmo: Which To Use And When (2024)

These days, cash apps let you move money about as quickly as you can spend it. Two of the most popular apps are Zelle and Venmo. But while they’re both members of the same family, they’re more like cousins than twins. Each app works differently, and each might work out better for you than the other.

In the Zelle vs. Venmo competition, one app isn’t the clear winner. The victor in this competition depends on what you’re looking for in a mobile payment app.

Zelle vs. Venmo

If you often need to send money to or receive it from friends and family, odds are you’re considering Zelle or Venmo to expedite payments. Zelle and Venmo are peer-to-peer (P2P) digital payment services that make it easy to do things like split a bill or pay the babysitter.

Zelle and Venmo are available only in the U.S., unlike competitor PayPal, which has users in over 200 countries and supports 25 different currencies.

What Is Zelle?

Zelle allows you to send and receive money instantly between U.S. bank accounts. There are two ways to use Zelle: through participating banks and credit unions; or via the Zelle mobile app. Nearly 10,000 financial institutions have joined Zelle since its launch in 2017, and 1.8 billion payments were sent through the platform in 2021.

How Does Zelle Work?

Zelle (rhymes with sell) is a peer-to-peer or person-to-person app that enables you to send money quickly from your bank account to anybody you pick. Typically, Zelle capabilities are built into an app from a bank or credit union. More than 1,700 banks and credit unions in the U.S. offer Zelle within their apps.

In 2021, Zelle users sent $490 billion—nearly half a trillion dollars—in payments. Zelle’s technology comes from Early Warning Services LLC, owned by seven major U.S banks: Bank of America, BB&T (now Truist), Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo.

You must have a U.S. checking or savings account to use Zelle. Zelle doesn’t charge fees to use its service.

What Is Venmo?

Venmo is a social payment app you can use to exchange funds with people and businesses. Unlike Zelle, Venmo functions as a digital wallet, allowing you to accrue money in your Venmo account to pay for future purchases. You can access your Venmo account using the mobile app or Venmo’s website.

The Venmo app also lets users purchase crypto.

How Does Venmo Work?

You must sign up for a free Venmo account to send and receive money on the platform. When another Venmo user transfers funds to you, the money will arrive in your account instantly. You can then choose to keep the funds in your account or transfer the money to a linked bank account.

How Do You Use Zelle?

Many people access Zelle through their bank’s website or mobile app. If your bank’s app isn’t integrated with Zelle, you can download the Zelle app directly. You’ll need to download the app from the App Store or Google Play, then enter your mobile number and the number of either a Visa or Mastercard debit card.

Once you enroll in Zelle, all you need to transfer funds is the recipient’s email address or phone number. If the recipient has already signed up with Zelle, the money will appear within minutes in their bank account.

If you send money to someone who doesn’t have a Zelle account, they’ll receive a notification from Zelle. Zelle will walk them through the steps to create an account and receive the money. The person receiving funds must sign up for Zelle within 14 days. Otherwise, the payment will expire, and the money will be returned to the sender.

Aside from sending and receiving money via Zelle, you can accept payments through the app. This can include money owed to you by government agencies, schools or companies.

How Do You Use Venmo?

You can use Venmo to send or receive money from other Venmo users.

After creating a Venmo account, select the blue “Pay/Request” button and enter the name, username, email address or phone number of the person you’d like to transact with. If the person is nearby, you can scan a QR code generated by their app to locate their account.

What Are the Pros of Zelle?

Zelle offers several advantages compared with Venmo. Among them are:

• No fees
• Availability to customers of nearly 10,000 banks and credit unions in the U.S.
• Quick transfers of money; typically, money sent through Zelle is available to the recipient in a matter of minutes
• Ability to earn interest on money held in checking or savings accounts tied to Zelle

What Are the Cons of Zelle?

Just as with any app, Zelle has disadvantages. They include:

• Inability to cancel a payment after it’s been sent if the recipient is enrolled in Zelle
• No availability of a Zelle-branded debit or credit card
• Zelle account can’t be linked to a credit card
• No ability to maintain a cash balance with Zelle

What Are the Pros of Venmo?

• No monthly or annual fees
• Ability to use Venmo for online or in-store purchases
• Availability of Venmo-branded debit and credit cards
• Ability to maintain a cash balance in Venmo account
• App’s social media-style features may appeal to some users

What Are the Cons of Venmo?

• Fees for some services
• Privacy may be compromised unless you adjust privacy settings
• Money is unavailable instantly unless you pay a fee
• No ability to earn interest on money on money deposited with Venmo
• Transaction limits, such as a weekly maximum of $4,999.99 for person-to-person payments (Zelle also has some transaction limits, but they’re set by your bank or credit union, not by Zelle.)

Are Zelle and Venmo Safe To Use?

Generally speaking, Zelle and Venmo are safe. Both incorporate security features into their apps, such as data encryption, purchase verification, multifactor authentication and fraud protection. Also, both Zelle and Venmo stress that you should send money only to trusted recipients, not strangers, to avoid being ripped off.

Despite these safeguards, users of Zelle and Venmo are susceptible to scams. A report from Democratic U.S. Sen. Elizabeth Warren of Massachusetts said roughly 193,000 instances of fraud were reported by Zelle consumers in 2021 and the first half of 2022.

In October 2021, the federal Consumer Financial Protection Bureau put providers of payment technology on notice that their business practices would come under greater scrutiny, in part to shield consumers from payment fraud.

“Scammers use mobile payment services to trick people into sending money or merchandise without holding up their end of the deal. For example, a scammer may sell you concert or sports tickets but then never actually give them to you,” the CFPB warns. “Or a scammer might purchase an item from you, appear to send a payment and then cancel it before it reaches your bank account.”

Among other steps, the bureau has suggested setting up password, PIN or fingerprint capabilities on an app like Zelle or Venmo to add an extra layer of protection.

In response to Sen. Warren’s report about Zelle, Early Warning Services released a statement saying “the proportion of fraud and scams has steadily decreased” on the platform since its 2017 start.

Final Verdict: Zelle or Venmo?

Zelle and Venmo allow you to easily exchange funds with people and businesses you trust. One of the main differences is Zelle transfers are instant and free. With Venmo, receiving funds takes one to three business days—unless you pay a 1.75% instant transfer fee.

It’s fair to say that with Zelle, you may be able to receive funds faster with fewer costs. For those looking for a digital wallet that allows you to accrue and hold funds, Venmo might be the better option, as you cannot maintain a cash balance with Zelle. Additionally, payments sent through Zelle can’t be canceled if the recipient is already enrolled with Zelle.

Bottom Line

Zelle and Venmo offer fast and safe ways to send and receive funds electronically. If you’re looking for a place to hold funds, Venmo is the better option. If you’re looking for the quickest and cheapest option, Zelle might be the app for you.

Frequently Asked Questions (FAQs)