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In a culture where convenience trumps cost, digital payment platforms have gained immense popularity among both consumers and businesses. Of these apps, Zelle and Venmo have reigned supreme regarding consumer use and popularity—with 36% of US adults having used Zelle at some point and 38% Venmo. Pew Research Center. “Payment apps like Venmo and Cash App bring convenience – and security concerns – to some users“. Accessed November 9, 2023.. These platforms provide a fast, convenient, and arguably secure way to make transfers and purchases.
Providing consumers with a seamless and hassle-free payment experience is important to remain relevant and competitive as a business. However, you must also ensure the payment platform you work with is cost-effective, secure, and meets your business requirements. In this guide, we’ll compare Zelle and Venmo for business applications to help you assess the best fit for your unique setup.
Understanding the Capabilities of Zelle for Business
Zelle’s peer-to-peer payment platform launched in 2017. With the app, you can send money directly between any bank account in the Zelle network, which comprises more than 1800 banks and financial institutions.
Unlike other digital payment platforms, Zelle does not serve as a digital wallet. Instead of keeping money in a third-party wallet, transactions are reflected in your actual bank account—meaning there is no need to move cash out later. Account holders at financial institutions that offer Zelle can access the service directly from their mobile banking app.
However, Zelle for Business is slightly different from the peer-to-peer application, as it requires users to have a business checking account. As such, not all network banks support Zelle business accounts. So even if your bank supports P2P Zelle transfers, you’ll need to confirm if it supports business use.
Once you have set up your business account, you can request customer payments directly via Zelle. Customers will initiate payment using their linked phone number, email address, or QR code—and you’ll get a notification from Zelle when you receive the payment. With these contactless payments, your clients never have to show up on-site to settle their accounts.
Zelle also eliminates the costs and delays associated with transfers between different banks. Financial institutions generally only allow free instant transfers to other accounts within the same banking institution (i.e. FirstBank to FirstBank accounts). However, with Zelle, businesses can make and receive transfers quickly and without extra fees to accounts with different financial institutions (e.g. Chase to FirstBank).
One noteworthy limitation in using a Zelle business account is that the platform only applies in the United States. Therefore, you cannot process international payments or currencies other than the US dollar with Zelle.
Understanding the Capabilities of Venmo for Business
Let’s preface this section by noting that Venmo prohibits using the peer-to-peer app for business. You must register a Venmo for Business account to perform business-related transactions.
Venmo makes sending and receiving payments convenient by acting as a middleman between transacting parties. Both the sending and receiving parties need to have the Venmo app and create a user account; users can then link their Venmo account to their bank account or credit/debit card to make payments. Account holders can also use their Venmo account as a funding source.
Venmo transactions will appear directly in your Venmo account. From there, you can transfer funds into your actual bank account. In addition to in-app transactions, Venmo has partnered with Synchrony Bank and Bancorp to offer qualifying users a Venmo Visa Credit Card and Venmo Mastercard Debit Card. This allows account holders to use their Venmo funds for in-person payments at major retailers, in addition to online and mobile purchases.
Venmo for Business integrates with online platforms for eCommerce payments and features scan-and-pay QR code capabilities. However, like Zelle, Venmo is only available in the United States and cannot be used for international transactions or currencies other than the US dollar.
Venmo vs Zelle: Comparing the Similarities and Differences
While both Zelle and Venmo offer convenience, there are differences in how quickly funds are transferred. Since Zelle directly links to a user’s bank account and connects to the existing infrastructure, transfers generally reflect almost instantly. This is particularly beneficial for businesses since it minimizes cash flow problems.
Venmo’s standard transfer time, on the other hand, can take anywhere between one and three days. Venmo does allow you to fast-track transfers; however, this will cost you 1.75% of the payment value.
When it comes to Zelle and Venmo bank integrations, there are three distinguishing aspects.
In terms of actual banking entities, the platforms are somewhat comparable. Since Venmo is a third-party provider, it should work with any US bank account. But as mentioned earlier, Zelle relies on a partner network—and while that network is quite broad for P2P transactions, not all partner banks support business services. You will need to check with your specific bank as to whether they support Zelle for business use.
Finally, Zelle does not support debit or credit card payments. Venmo, on the other hand, supports all major debit, credit, and prepaid cards including American Express, Discover, Visa, and Mastercard.
Fees and Limitations
Transaction fees can eat into your profits at an alarming rate. When choosing a payment platform for your business, fees are often a top consideration—but you must also balance this with providing payment convenience for your customers. It’s no use eliminating fees if you’re going to chase your customers away because you can’t accommodate their preferred payment method. Finding the right balance will depend on your business priorities, business type, and target demographic.
If your priority is minimizing transaction fees as much as possible, Zelle is a good choice. Zelle doesn’t deduct any transaction fees—that’s right, you can send and receive payments free of charge.
While this is certainly beneficial, the fact that the platform does not support card payments means you might lose customers who want to pay by credit card. It’s also important to check with your specific banking entity whether it charges fees of its own for business transactions through Zelle.
Although the convenience and variety of payment methods offered by Venmo mean your customers can pay in almost any way that suits them, it does come at a cost. Consider how the below fees will impact profits and pricing when using Venmo for Business as your chosen payment platform:
- Receiving payments for goods and services: 1.9% plus $0.10
- Credit card transactions: 3%
- Online transactions: 3.49% plus $0.49
- ATM withdrawals: $2.50
- Cashing a check, including payroll and government checks: 1% (minimum $5)
Venmo fees entail a wide amount of variation depending on several factors. For a more extensive breakdown, check out our Venmo fee guide here.
Venmo business accounts have fewer limits than Venmo personal accounts; however, the limit amount will depend on whether your account identity is verified. Weekly purchase limits work on a rolling seven-day schedule. Unverified business accounts can transact $2,499.99 weekly, while verified accounts are capped at $24,999.99 (with a per-transaction limit of $2,999.99).
There are also limits on making transfers to your linked bank account. Unverified accounts are capped at $999.99. If your account is verified, you can transfer up to $49,999.99 from Venmo to your linked bank account.
Limitations on the number and size of transactions for Zelle users are bank-specific. For instance, Bank of America allows a maximum of 20 transactions per day and 120 transactions per month. While your daily sending limit is $15,000, the monthly cap is $60,000. Wells Fargo, on the other hand, has much tighter limits at $3,500 per day and $20,000 per month. In addition, the bank caps receive $10,000 daily. Discover has an even tighter cap at $600 daily.
Additionally, please note that even though your business must be registered with Zelle to accept payments, a customer can still pay you up to $500 per week if their bank is not a Zelle partner.
Fortunately, Venmo and Zelle integrate standard security protocols to protect user data and funds. However, there are a few key differences between the two platforms:
Venmo Offers Purchase Protection, Zelle Does Not
One of the reasons you pay business transaction fees with Venmo is to enable the provider to offer a protection service. Venmo’s seller protection can help prevent losses from unauthorized transactions; it can also protect you if customers claim they never received goods purchased from you.
Please note: this protection service for sellers only applies to business accounts.
Zelle Funds Are FDIC-Insured, Venmo Funds Are Not
Although Zelle does not offer fraud protection for scam purchases, the fact that Zelle transfers money directly to and from your FDIC-insured bank account means that your funds are protected up to $250,000. But keep in mind that only funds in your bank account are insured. Once you authorize funds to leave your account, those funds are no longer under FDIC protection.
If you generally leave funds in your Venmo account and it gets hacked, you could lose those funds since Venmo accounts are not FDIC-insured. However, it’s also worth considering that Zelle’s direct transfer path could provide hackers a direct gateway to your bank account.
Venmo Offers First-Party App Security, Zelle Depends on Banks
Both Zelle and Venmo keep bank account information safe by enabling payments linked to an email address, business name, or phone number. This way, even when a customer initiates a payment to you, they never have access to your bank account details. Zelle and Venmo both use data encryption and authentication measures.
Where the Venmo app allows you to set up two-factor authentication, such as a PIN or biometric verification, the extra security features with Zelle will depend on the banking app you use to access the service.
Matching Your Business Needs With the Right Payment Platform
Zelle and Venmo have some significant feature differences, making each platform more suited to certain business types than others.
Zelle is a better fit for small businesses that don’t need to accept client card payments. In particular, freelancers may find Zelle especially useful since they can send payment requests to clients and receive payment remotely and instantly.
Conversely, Venmo is better for small-to-medium-sized businesses that want to offer clients card and online payment options. Venmo is a good option for retail and service businesses as well as small restaurants since the platform allows tipping integration and bill splitting. Venmo’s higher transfer limits make it better suited for larger businesses than Zelle.
But the downside with both of these payment platforms is that in either case, you are sacrificing something. With Zelle you sacrifice payment options for lower fees; with Venmo, you sacrifice your profit for more options.
The two platforms generally lack flexibility and business-specific features. The one-size-fits-all approach of digital payment platforms means that few offerings will be perfectly suited to your needs. They both have remarkable benefits—but your business may outgrow what they can offer in the long run.
An Alternative to Venmo and Zelle
Looking beyond a payment platform to a dedicated merchant account could be the solution to finding the right balance for your business. Merchant account providers generally negotiate fees according to your budget and business specifics. They allow you to process all payment types, from online payments and credit cards to scan-and-pay and payment links. Other benefits of a merchant account include easy return processing, chargeback administration, and access to fraud protection.
PaymentCloud is a merchant service provider that customizes payment processing offerings to support your growth and unique needs. Whether you need more credit card processing options, fewer limitations, or increased protection, our expert account managers have the industry knowledge to optimize a solution for your business.
- Pew Research Center. “Payment apps like Venmo and Cash App bring convenience – and security concerns – to some users“. Accessed November 9, 2023.