Scott Rosenthal, a disc jockey in Cape Cod, Massachusetts, wasn’t thrilled when he learned Venmo, the payment app owned by PayPal, is introducing new fees for vendors who accept payments on their personal accounts.
“In the big scheme of things, (the fees are) not much,” he said, quickly calculating how much they would cost him over a month, then a year. It was hundreds of dollars. “That’s not fun. I guess I’m going to have to relook at things.”
This isn’t the first time Rosenthal — who estimated he receives about 30 Venmo deposits from customers every month — has had to rethink his approach to cashless payments. He started using Venmo after leaving PayPal because of its hefty fees. Now, he’s considering going back to paper checks.
In that sense, Rosenthal might be an everyman. Choosing which app to rely on for person-to-person payments is difficult, partly because there are so many options. Apple, Facebook and Google have all entered the cashless payments game, and consumer favorites like PayPal, Venmo and Square’s Cash App thrived during the pandemic.
“The fear of touching cash at first and the fear of touching public terminals got a lot of folks to finally set up digital payment systems in their mobile phones or use them for the first time,” said Lily Varon, a senior analyst at research firm Forrester.
The numbers bear that out. Sixty-one percent of adults who use the internet transferred money digitally to a friend or family member so far this year, compared with 51% in 2019, according to Forrester data. Of the major digital payment providers, PayPal and Venmo lead the pack, according to Forrester, with Cash App making fast inroads the past year. In June, Cash App received 2 million downloads worldwide, with PayPal and Venmo together receiving about 11 million, according to data from Sensor Tower.
Payment apps make our wallets lighter and our fingers cleaner, but they also come with problems of their own. Venmo recently found itself in the spotlight when BuzzFeed News reported the app’s social feed and public friend networks allowed reporters to uncover President Joe Biden’s friend list after just 10 minutes of searching. Two weeks later, Venmo changed its settings to allow users to set their payments and networks to private. The company said Tuesday it’s retiring the public global feed that showed your payments to utter strangers. But the new fees, , including the charge of 1.9% plus 10 cents on purchases buyers designate as “goods and services,” are drawing criticism from gig workers and small-business owners like Rosenthal.
Venmo said the new transaction type will provide a better experience for customers, as those purchases will be eligible for the company’s purchase protection program.
Ultimately, the best person-to-person payment app depends on what you use it for — and how much you care about digital privacy.
We looked at the fees, limits, usability and data practices of top apps including Venmo, PayPal Mobile Cash, Cash App, Facebook Pay, Apple Cash, Google Pay and Zelle.
Here are our recommendations.
For large payments
For any payment that’s more than $10,000 — like a car purchase — PayPal still reigns. In this case, there are no hefty fees and you won’t be charged for payments unless you pay from a credit card or pay internationally.
Verified accounts linked to a credit card or bank account have no limit on the total amount of money they can send, and they can send up to $60,000 per transaction. PayPal does charge a fee of 2.9% plus 30 cents to send money from credit cards.
For instant transfers
Zelle, a digital payments tool that partners with hundreds of banks, is the only option on our list that doesn’t charge a fee for instant transfers to a bank account. Think of it this way: Apps like Venmo act like a separate holding space for the money you’ve received, while Zelle puts that money directly into your account. You don’t have to initiate a transfer in between.
If you already use a mobile banking app, you can enroll in Zelle by downloading the Zelle app from Google Play or the Apple app store. Zelle will open your banking app’s log-in screen and ask you to input your username and password. That syncs the Zelle app with your eligible bank account. (Nearly all major banks work with Zelle.) Going forward, you’ll log in to the Zelle app with a separate username and password you create. You can also check your banking app itself for a Zelle integration.
Keep in mind that Zelle transfers are instant and irreversible. You pay other Zelle users by typing in their email addresses or phone numbers, so if you end up sending money to the wrong number, that money is gone. Unlike Venmo and PayPal, there’s no purchase protection. You’d have to take up any issues with your bank’s customer service.
It’s worth noting that Facebook Pay doesn’t charge a fee for instant transfers to a Visa or Mastercard debit card. Whether you make use of this option depends on how much you want to rely on a giant social media company to mediate your peer-to-peer payments.
For splitting the tab
You may need to split a check eight ways, but you don’t have to torture your server with eight different tickets. Splitwise is an app that keeps track of shared expenses, from vacations to rent to meals.
Sign-up for the app is quick — just an email address and password. Add individual expenses, like “amusement park tickets,” or create a group to share multiple or recurring expenses, like “vacation in Destin” or “rent at 123 Main Street.” Then, type in…
Read More: Breaking up with Venmo: The best payment apps for privacy and low fees