Which is Better: Venmo or Zelle?

Hands holding a credit card and using laptop computer for online bill paying.

At FindABetterBank, we're often asked whether using a service like Zelle is better or worse than using Venmo. This article reviews some of the key differences and similarities as well as provides a list of banks that offer Zelle.

What are these services? These services enable you to make transactions called “Person-to-Person” (P2P) Payments (see this article for a more complete description of P2P: Person-to-Person Payments).

Both these services enable you to "send" money to another person with their email address or phone number. A big difference is that Zelle is a service offered by participating banks and Venmo is a third-party service unaffiliated with any bank (Venmo is a subsidiary of PayPal).

Venmo is huge. According to the Wall Street Journal, over 40 million people used Venmo in the last 12 months. It's so popular that some people use the word venmo as a verb ("just venmo me the money"). When you set-up a Venmo account to send or receive money, you register your checking account and/or credit card information. Sending money from your checking account is free, but it could take up to 3 days to complete the transfer. Sending a Venmo payment using your credit card will cost 3% of the transaction amount. You'll pay a small fee if you require an instant payment through Venmo.

While Zelle is affiliated with specific banks, you can set-up a Zelle account even if your bank doesn't offer Zelle. However, there are more limits to transaction amounts if you're using Zelle independently from your bank. It is free and instant to send someone money through Zelle if the recipient's bank also offers Zelle. But if you send someone money and their bank doesn't offer Zelle, then the transfer will take up to 3 days just like Venmo. Zelle doesn't enable you to send money from a credit card account like Venmo.

Both services require that the recipient have an account with the service to receive money. So, if you send money to someone using these services, and the recipient doesn't have an account with that service already, they'll need to sign-up for the service to receive your payment. That's why many of our readers tell us they use both services. For example, if your landlord's bank offers Zelle, then it's a great free service to pay your rent instantly on the first of the month. But because so many consumers already have Venmo accounts, it may easier to send money to friends through Venmo.