How much can you deposit on venmo

This story is part of CNBC Make It's One-Minute Money Hacks series, which provides easy, straightforward tips and tricks to help you understand your finances and take control of your money.

If you use your smartphone to send money to friends and family, chances are good that it's happening on Venmo. The peer-to-peer payment service has more than 50 million users in the U.S. who sent nearly $160 billion to each other in 2020.

But despite the ease with which Venmo allows you to pay rent or split the dinner bill, you should always keep an eye on your Venmo balance and make sure it doesn't get too high.

Here are three reasons why you should always transfer the bulk of your balance to the bank.

1. Your Venmo balance doesn't earn interest

Unlike money in your investments or savings account, your Venmo balance isn't working for you. Rather than increasing in value over time, your balance remains the same no matter how long you keep it in the app.

Instead, putting that money into a high-yield savings account will allow it to grow. High-yield accounts currently offer rates as high as 0.6% APY.

2. Your Venmo balance isn't insured

Unlike your bank account, your Venmo balance isn't insured by the Federal Deposit Insurance Corp. If your bank were to go under, the government insures up to $250,000. But Venmo has no such guarantees.

That means that in the unlikely event that the service goes down, Venmo isn't responsible for you getting back whatever funds you had sitting in your account.

It's smarter to minimize your risk by not leaving any significant sums of money in the app.

3. Venmo transfers take time

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

Several mobile payment apps and peer-to-peer payment tools can help you quickly send and receive money. You may be most familiar with Venmo and PayPal, two of the most popular apps on the market. If you’re trying to decide between these two services, it helps to know how they work and the pros and cons of each.

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Here’s a closer look at Venmo and PayPal and how these platforms can help you send money, receive money and shop online.

Venmo vs. PayPal: Quick Look

What Is Venmo?

Venmo is a digital payment platform that allows you to send and receive money quickly and securely. Venmo is known for its social features. Users can personalize their payments with notes and emoji so that “settling up feels like catching up,” according to the company.

Venmo has evolved from a social payment app to a one-stop shop for consumers and businesses to receive money, make purchases and even buy cryptocurrency. Venmo launched in 2009 and was purchased by PayPal in 2013. Venmo currently has over 83 million users.

How Does Venmo Work?

Venmo lets you connect your external bank account, debit card or credit card to the app to send or receive payments. Whether you want to split the brunch bill or transfer your share of the rent, you can do so for free on the Venmo app.

Venmo acts as a digital bank account, allowing you to accrue an account balance, which you can use to make purchases and transfers. You can have your paychecks sent to your Venmo account via direct deposit and receive your money up to two days early.

Your Venmo account balance is protected by FDIC pass-through insurance, but only if you add money to your account via direct deposit or mobile deposit or if you’ve purchased cryptocurrency. It’s free to send or receive money using funds from your Venmo account balance or your linked bank account.

Venmo limits how much you can spend, send and withdraw each week, and verifying your account will increase these limits. With a verified personal account, you can spend up to $7,000 per week on purchases, send up to $60,000 per week and transfer up to $19,999.99 per week ($5,000 per transaction) to your bank.

With a verified business account, you can send up to $25,000 per week and transfer up to $49,999.99 per week to a linked bank account. Per-transaction limits may also apply. Due to its relatively low weekly transfer limits, Venmo is ideal for consumers and small businesses.

How To Set Up a Venmo Account

Here’s how to set up a Venmo account, step by step.

For personal use:

Download the Venmo mobile app (available on iOS and Android) or go to the Venmo website.
Open the Venmo app or select “Get Venmo” on the Venmo website.
Sign up with your email address or Facebook account and agree to the terms and conditions. (This step will come first for mobile users, whereas desktop users will be prompted to complete the phone number verification steps below first.)
Provide your phone number to receive a verification code.
Enter the confirmation code in the app or website and select submit.
Add your bank account to begin sending and receiving money.

For business use:

Download and open the Venmo mobile app or go to the Venmo website and choose “Get Venmo.”
Follow the steps above to create a Venmo account for personal use.
Once you create your personal Venmo account, select the button that says “create a business profile.”
Choose whether you operate as an individual (sole proprietor) or a registered business (LLC, partnership, corporation, etc.).
Enter your business name, username and a short description of your business.
Fill in your contact details.
Preview your profile and publish.

Pros

Easy to quickly send and receive money and shop online
Few fees unless you make certain kinds of transactions or receive payment as a small business owner
Interactive social features and colorful emoji
Optional debit and credit cards

Cons

Only available in the U.S.
$7,000 weekly spending limit on purchases, including merchant payments and Venmo Mastercard debit transactions
Not as widely accepted at businesses as other forms of payment, like debit cards, credit cards or cash
1.75% fee (with a minimum fee of $0.25 and a maximum fee of $25) for instant transfer of money to your external bank account or debit card
Privacy settings may be difficult to navigate—transactions may be publically visible to app users

What Is PayPal?

PayPal is a financial technology company that has been a reliable way to send and receive money online since the late 1990s. Today, PayPal is a payment processing giant with several brands under its umbrella, such as Venmo, Honey, Xoom and Zettle. PayPal connects 429 million users in over 200 markets worldwide, while Venmo is only available in the U.S.

Like Venmo, PayPal is a fast and secure way to make payments, receive money and transfer funds to family and friends. However, PayPal is more oriented toward business transactions, or payments for goods and services, while Venmo is more focused on personal transactions.

PayPal offers 24/7 account monitoring, fraud prevention and other protections for buyers and sellers on its platform. If you purchase an item with your PayPal account and the item arrives damaged, you can receive a refund. Like Venmo, PayPal allows users to buy and sell cryptocurrency directly on the platform.

How Does PayPal Work?

Like Venmo, PayPal allows you to link an external bank account, debit card or credit card. You can carry a balance in your PayPal account and use it like a bank account to make purchases or send money.

If you don’t have a PayPal account, you can still spend money; however, one-time payments are limited to $4,000. Verified PayPal users can send as much money as they want up to $60,000, though the per transaction limit might be less. You can create a personal PayPal.Me link to make it easy to share your account with friends and family.

PayPal offers various benefits to businesses, such as loans, payment solutions and the ability to do business in 25 currencies. Like Venmo, you can use the PayPal app for in-person payments at participating merchants. If you need to accept payments from customers, PayPal offers more options than Venmo.

How To Set Up a PayPal Account

You can set up a PayPal account by following the instructions below.

For personal use:

Go to the PayPal website or download the PayPal app and select “Sign up.”
Select personal account.
Enter an email address and password.
Fill in your name, address and phone number.
Link your debit or credit card or bank account.

For business use:

Go to PayPal.com or download the PayPal app and select “Sign up.”
Select open a business account.
Enter your email address and create a password.
Fill in your business’s name and contact details.
Read the user agreement and select “Create account.”

Pros

Accepted by millions of merchants
Available in 200+ countries; lets you send money worldwide in 25 currencies
Robust business tools offer reliable ways to get paid and make payments more convenient for customers

Cons

PayPal has a more complex fee structure than Venmo
1.75% fee for instant transfer of money to your external bank or debit card
User experience is more complex than Venmo

Venmo Vs. PayPal

Venmo and PayPal are so popular they’ve become verbs. If you’re deciding between having someone “PayPal” or “Venmo” you, here are some factors to consider.

Start by thinking about the transactions you want to make and who you need to exchange funds with. Venmo excels in the peer-to-peer (P2P) payment space, while PayPal excels with businesses. PayPal outshines Venmo with its robust payment solutions for merchants, while Venmo makes it convenient to send money to people you know.

Venmo is taking steps to become more business-friendly, and over 2 million companies now accept Venmo as a form of payment. However, PayPal is still the frontrunner for business solutions.

Both Venmo and PayPal have mobile and desktop versions you can use to send and receive funds. PayPal is also available on mobile and desktop and allows you to make payments through the app or website. Both also provide a digital record of your transactions, making it easy to track money coming in and money going out.

PayPal and Venmo allow you to deposit checks into your account by taking a picture of the check. However, PayPal users must sign up for a PayPal Balance account to access the benefit.

Sending Money

PayPal lets you send money to anyone in 25 currencies and more than 190 countries, so long as you have the recipient’s username or email address. Venmo enables you to send money to anyone in the U.S. who has a phone that can receive text messages. If the recipient does not already have a PayPal or Venmo account, they will be prompted to create one. With both services, you can sync your contacts to the app.

Venmo generally lets you send money fee-free, so long as you’re sending money from your Venmo balance, bank account or debit card. If you use your credit card to send money, you’ll pay a 3% fee.

PayPal lets you send personal transactions fee-free if the money comes from your PayPal balance or bank account, but if you use a credit card or debit card, you’ll pay a 2.90% fee plus an additional fixed fee based on the currency. You’ll also pay fees for international personal transactions.

Receiving and Requesting Money

There is no fee to receive money for personal transactions on Venmo or PayPal (when no currency conversion is involved).

Access

The Venmo app is available in the Apple App Store (rated 4.9 out of 5 stars) and the Google Play store (rated 4.1 out of 5 stars). The PayPal mobile app is available in the App Store (rated 4.8 out of 5 stars) and Google Play (rated 4.3 out of 5 stars), or you can sign in to your PayPal account online from any browser.

Venmo Fees vs. PayPal Fees

Perhaps the most notable difference between PayPal and Venmo fees for most personal users is that PayPal charges a 2.90% fee for personal debit card transactions, while personal debit card transactions are fee-free on Venmo.

Pay attention to what kind of transaction you are making. Both PayPal and Venmo charge an extra fee (1.75%) for instant transfers when moving money to your external bank account or card account. And both charge for sending money with a credit card: 3% with Venmo and 2.90% on PayPal.

PayPal and Venmo also charge fees for business transactions. So, if you are receiving payments as a business owner, freelancer or entrepreneur, be prepared to pay a fee for those transactions.

Business Features

Venmo has business features that enable small businesses to accept Venmo payments in person or online, using QR codes for point-of-sale transactions. You can set up a Venmo business profile for your small business and get paid via the app in the same way that people use Venmo to pay their friends.

PayPal offers a more extensive commerce system for businesses, with features and services such as point-of-sale, payments and invoicing, business debit cards, working capital and business loans, shipping and dispute management and more.

Money Transfer Partners

International Transfers

98+ currencies available to transfer to 130+ countries

Fast and Easy

Initiate transfers 24 hours a day, 7 days a week

Fees

Xe offers low to no fees on money transfers

Wise – Multi-Currency Account

Convert and hold

55 currencies

Payment options

Direct debit, wire transfer, debit card, credit card & Apple Pay

Wise – Multi-Currency Account

Multi-currency accounts

Hold over 20 currencies

International transfers

Send and receive to over 150 countries

Fast and secure

Money transfers up to 8x cheaper than traditional banks

Bottom Line

Venmo and PayPal are simple, fast and secure ways to send and receive money online. PayPal offers the most benefits to midsized and large businesses, while Venmo might be better for consumers and small businesses.

Frequently Asked Questions (FAQs)

What security features do Venmo and PayPal offer?

Venmo uses encryption to protect your account information. You can also work with Venmo to set up multi-factor authentication or create a PIN for your account. PayPal offers similar security protections as Venmo, but it also provides a more robust set of security features for businesses.

Are Venmo and PayPal FDIC insured?

It depends on how you use your account. Venmo and PayPal are not banks, and keeping money in your Venmo or PayPal balance is not the same as keeping it in an FDIC-insured bank account.

However, if you use direct deposit for Venmo or PayPal, that money is transferred to and held by each service’s bank partner, where the funds are eligible for FDIC pass-through insurance up to the applicable limits. Also, if you have a PayPal Cash Plus account and a PayPal Cash Mastercard, the FDIC pass-through insurance also applies.

If you want the security of FDIC insurance, make sure your PayPal or Venmo deposits are eligible.

Can I withdraw cash at an ATM from my Venmo or PayPal account?

Yes, if you have a Venmo or PayPal debit card set up for the account. The Venmo debit card offers free ATM withdrawals from MoneyPass ATMs within the U.S. The PayPal Cash card lets you withdraw cash fee-free from over 37,000 MoneyPass ATMs worldwide.

How long does PayPal hold money?

PayPal can hold funds for up to 21 days if it notices suspicious activity on your account or if you’re a new or inactive seller on the platform. It might be possible to access your money sooner by using one of PayPal’s approved shipping carriers and adding delivery tracking information.