Using apps to transfer money is a handy-dandy way to give someone cash without having to deal with gross old physical dollars. And although there are a bunch of apps to pick from, two have emerged as users' top choices: Venmo and Zelle. So which is best for you?
Zelle is a money transfer app owned by Early Warning Services, a financial tech company owned by the U.S.'s seven largest banks, including Bank of America, Capital One, JPMorgan Chase, and Wells Fargo. It launched in 2017 offering person-to-person (P2P) payments and only requires a U.S. banking account, email address, and a mobile number.
Being made by a company owned by banks means Zelle focuses on banks with its service: Users transfer money directly through their bank accounts. This is actually a pretty significant difference from Venmo, which acts as a wallet to hold and transfer money held in a Venmo account.
According to Zelle, hundreds of banks and credit unions have integrated the company's services within their own banking apps as part of the Zelle Network. However, if your bank isn't part of the network, you can download the app for Android or iPhone on your own and attach your Visa or Mastercard debit card instead to move money around. Zelle doesn't accept credit cards.
The Zelle app is free to use, but your bank might still charge fees for its services, so definitely double-check the small print. Your friend will also need to have a Zelle account to receive any money; if they don't, and the funds are left in limbo, the transaction will be cancelled and the money will return to you.
Venmo is a P2P money transfer app owned by PayPal, a company name you've probably seen while buying something online. It often pops up as an alternative payment option that can keep your payment details confidential from the online store.
Unlike Zelle, it holds your money in an account instead of pulling it directly from your bank. So you basically take money from your checking or savings, transfer it to your Venmo account, then transfer the amount you want to your friend.
The app is unique in that it has something of a social media aspect to it. You can add your friends and check their statuses, which include the latest purchases they've made with Venmo. You can like, comment, and add emoji to these statuses as well. This feature has gotten Venmo in trouble with privacy issues before, but you can adjust your settings to keep your transactions between you and your friend.
Venmo, in general, doesn't charge any fees to send or receive money through the app. But sending money using a credit card will incur a 3% fee, and there is a 1% fee to instantly transfer money from your Venmo wallet to your bank account. Without the instant transfer, it typically takes a day for the money to reach your account.
So which money transfer app is better?
Neither app allows for international transactions, so both the sender and receiver have to be in the U.S. and have a U.S. smartphone.
Neither are particularly more secure than the other, either. Zelle might give you some peace of mind since your bank account is likely FDIC insured and offers some safeguards that come with having a bank account. PayPal, on the other hand, might ease some concerns because it's not directly connected with your bank account. So you're only taking money from your digital wallet, not freely funneling it from your savings. Both companies, however, advise transferring money between people you trust for maximum security.
In the end, it's all up to you. Convenience is probably the biggest factor if you're still debating between the two. Honestly, if you and your friends have banks that are part of the Zelle Network, it might be better to just go with Zelle. But if you're looking for wider use among the public (and celebs, if you're lucky enough to get a cash gift from one), Venmo seems to be the way to go.
Then again, you could always get both and use them depending on the situation. After all, it might not be a bad idea to have a backup in case one crashes.