What’s The Better Way To Send Money? Venmo, Zelle, CashApp Or Paypal’s Xoom: Pros and Cons

The use of cash was declining before the coronavirus pandemic, with people shifting toward digital payments as the fintech industry hyped the absence of physical cash as a more secure alternative.

The benefits of a cashless society have been underscored in the coronavirus economy, where your life may depend on staying away from other people and not touching their money.

Just a warning from Experian — a credit reporting agency that knows all about security breaches — about using digital payments to transfer money. “Though it may be a quick and easy option, it’s important for users to remember to use it responsibly, making sure to confirm they’re sending funds to people they know and trust … before transferring money, as this is one of the major areas of loss while using money-transfer apps.”

What’s the better way to send money? Here are some pros and cons for Venmo, Zelle, CashApp and Xoom.

Venmo

Venmo allows users to send money to each other via a linked bank account, Venmo balance or credit card. The service is owned by PayPal and offers a free, optional debit card that allows users to spend money from their Venmo account balance. You can request money or send money to another person through the mobile payment app via email or phone number.

Pros:

• It’s free to sign up and to send and receive money unless you use a credit card for your transactions.
• More than $40 million people use Venmo, so it’s a very popular way to send, request and receive money and a convenient way to go cashless.
• A free, optional debit card can be used with retailers, and the card will draw on the user’s Venmo balance for funding. It also gives users cash back for shopping at certain retailers.

Cons:

• If you use a credit card as the linked account, a Venmo fee of 3 percent per transaction applies.
• Venmo charges a fee for instant cash-out transfers to your bank account of 1 percent with a $10 maximum to transfer your Venmo funds instantly to your bank account. Otherwise you have to wait one to three business days to receive your funds for free, according to NerdWallet.

Zelle

Zelle is a digital payments network offered by more than 30 U.S. banks including most major banks. It lets people send money to other Zelle users (peer-to-peer transfers) either through their bank account or the Zelle app. The network owned by Early Warning Services, a private financial services company owned by the banks Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo.

Pros:

• There’s no fee to send or receive money with Zelle.
• Quick, direct money transfers between different banks and credit unions is one of the biggest benefits of Zelle. Unlike some other money transfer services, Zelle transfers money directly into your bank account, so you don’t have to wait to move it out of a third-party app, according to NerdWallet.
• Money transfers happen within seconds or minutes between other enrolled Zelle users.
• You can avoid escrow services or digital wallets because Zelle transfers go directly into a bank account.

Cons:

• You need a smartphone or tablet to use Zelle. If it’s available through your bank, you may be able to log in there to send money.
• You can’t connect a credit card to pay others.
• Zelle only works with domestic banks. You can’t send money to international bank accounts.

CashApp

If you’re not into the social vibe that Venmo promotes and want more anonymity, you might prefer Cash App.

Cash App is a money transfer app created in 2009 by Square Inc., which is owned by Twitter CEO Jack Dorsey. It allows people to send money via their Cash App balance, linked bank account, credit card or debit card. The service offers an optional debit card. Once a Cash App account is set up, users can send, request and receive money from other Cash App users, invest in stocks and buy and sell bitcoin.

Pros:

• A free, optional debit card allows users to spend their Cash App balances at different retailers and save money.
• The app can be used to invest in stocks and buy and sell bitcoin, potentially allowing users to earn money through the app.

Cons:

• There’s a 3 percent fee to send money via credit card.
• There’s a 1.5 percent fee for instant cashout deposits. Standard cashouts take one to three business days to deposit to your linked debit card.

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Xoom

Owned by PayPal, Xoom is an electronic funds transfer or remittance provider that allows users to send money, pay bills and reload mobile phones from the U.S. and Canada to 131 countries. It was founded in 2001.

Pros:

• Xoom tends to be cheaper than banks’ international wire transfers.
• Many transfers can arrive within minutes, regardless of the payment method.
• Cash pickup at supermarkets or other locations is a delivery option in some countries. You can fund a transfer with a bank account, debit or credit card, or PayPal account.
• Phone support is available 24/7 in English, Spanish and Filipino, and during certain hours in French, Italian, German and Arabic.

Cons:

• Xoom is pricey for an online provider, according to NerdWallet. Xoom tends to have low upfront fees under $5 when you use a bank account instead of debit or credit card. However, exchange rate markups can be more than 3 percent. Some providers mark up their rates by less than 1 percent.
• Some transfers can take up to a few days, depending on banking hours or time zones.