Just about everyone knows and has used PayPal as a service for buying things online, but its mobile payment app works just as well for paying friends. PayPal owns Venmo, and its mobile app is in many ways indistinguishable from the younger service's. Apple Pay and Google Pay still rule point-of-sale transactions, but you can nevertheless use the PayPal mobile app to pay and request payments from friends (even if they don't have the app), pay sites, and—in limited cases—pay stores. One big caveat for in-person payments under the coronavirus is that it doesn't offer NFC payments, as the OS platform plays do.
The current PayPal app is very good for paying others with PayPal accounts, and some may prefer its more no-nonsense approach, compared with Venmo and its attempt to tap into millennials' love of oversharing. It also benefits from PayPal's near ubiquity as a payment option on websites and apps, and from the fact that just about everyone who buys things on the web has a PayPal account. The company is also beginning to make a pitch for in-store payments using the app—more on this below.
How Much Does It Cost to Use PayPal?
The app is a free download, and buying stuff online with it is always free for the purchaser. But, as with all payment apps, a 2.9 percent fee is added if you use a credit card as a source of funds to pay someone. The same fee is applied if you use a debit card, sell something, or request the money from someone using a credit card. Transferring money to a linked bank account is free, but if you want same-day Instant transfer you'll pay a 1 percent surcharge, with a maximum of $10. You can view the updated fees on PayPal's site; transfers to other countries incur different (and higher) fees.
Getting Started With PayPal
After downloading the app, you need to create a PayPal account, if you haven't already got one—an unlikely situation if you've shopped much at all on the internet over the last decade. You must confirm your mobile phone number and then link a credit or debit card by entering the usual details. In some cases, you have to confirm the card is yours via small test charges. If you don't want any fees, you need to enter bank account info as well.
Similar Products
Google Pay
Apple Pay
Zelle
Cash App
Xoom
Venmo
There are three PayPal account levels: Personal, for those who just want to buy stuff online or send money to friends; Premiere, good for those who do a little selling online of their own; and Business, for full-fledged e-commerce shops. In all, I found setting up the PayPal app easier than setting up Apple Pay Cash, and about the same as for Venmo.
Using PayPal's Mobile App to Pay Friends
I installed the PayPal app on my iPhone X, and I'm happy to report that the app supports FaceID. I also tested with an Google Pixel 4 XL. The mobile interface is identical on both platforms. The home screen really could not be clearer, with sizable buttons for sending and requesting money. The screen also has options for managing your account, seeing activity, and paying local eateries and charities.
Paying a contact is just as easy in the app as payment with any other mobile payment app. To find people to pay more easily, grant access to your phone contacts. Searching the list helps if you have a multitude of duplicate contacts as I do. After choosing a contact for your munificence, the app asks whether it's a payment to friends and family or for goods and services—in the latter case, you may be eligible for PayPal Purchase Protection.
Next, you get the simple numeric keypad to choose the amount of money to send. After this, you can choose the source of funds for the payment—a card or bank account. The last step before sending is the option to add a note. That word optional is important, as Venmo insists on your adding a note with all payments, which I find off-putting. Tap send now, and your money starts flowing to your contact. Requesting money follows an identical process, but with the money flowing in the opposite direction.
New Feature: The PayPal Key
The PayPal Key is for websites that don't offer a PayPal button—it's basically a credit card number you can use. Signup is nearly instant, and after you accept the terms, you see a credit card number, expiration date, and security code to enter on any site. I liked that when I tried using this, PayPal required a two-factor security check in the form of an SMS message (PayPal also lets you authenticate with a time-based, one-time passcodes—also known as TOTP or OTP—such as Duo, Google Authenticator or Microsoft Authenticator.)
The Key doesn't offer money-back rewards as many credit cards do, but like Venmo, PayPal also offers a Mastercard debit card that does offer rewards at certain merchants. As you'd expect, the card lets you withdraw and add funds to your PayPal balance at select ATMs. But unlike the Venmo system, your PayPal balance is separate from that of the card; you need to move money between the two to use it. Interestingly, the card offers a savings account that accrues interest.
Paying Stores With PayPal
The PayPal app does have a cashless, in-store purchasing function using QR codes, instead of relying on near-field communication (NFC), the way Apple Pay and Google Wallet do. That means you don't have to have a special device for it to work. Small vendors can simply print out the QR code for customers to scan. Though the company has discontinued its order-ahead feature for food, a representative had this to say about in-store payments: "We recently announced that PayPal and Venmo will be introducing its in-store QR Code payment technology at all CVS stores across the country later this year."
Pools of Money
Like Venmo, PayPal's app lets you split costs with friends, but PayPal goes further with what it calls Money Pools. You set up a pool by giving it a name and optionally specifying a purpose, amount, and end date. You can allow contributors to pay any amount, specify an exact amount, or a minimum amount. Your pool can have a cover image and statement. It's a good fit for things like office pools for a coworker's new baby.
Once you're happy with the pool cover, you publish it and get a web link to send to people from whom you wish to collect. My test pool took longer than expected to create—a few minutes.
PayPal's Bonus Payment Features
Like Venmo, the PayPal app also sports a QR code feature letting others scan your phone screen to pay you, or vice versa. This makes it super easy to verify that the money is going to the correct recipient. You also get a PayPal.me address, a unique URL to use for requesting payments. If you go to paypal.me/username, for example, you can send some moola without ever having to know an email address, much less type it correctly. As with Venmo, however, beware of putting this address out in public—you can open yourself up to scams like being paid from nefarious sources of money and then held accountable.
One nice thing about paying someone via PayPal is that, unlike with Venmo, they don't have to have the app installed; they just need a PayPal account. The same holds for Google Pay/Wallet, but Apple Pay users must have an iOS device with an account set up. And the latter can only pay other Apple customers, whereas PayPal doesn't care what platform you're on.
The web interface for the app is just the regular PayPal site, showing all your activity and giving you the same payment options as the app.
International payments are an advantage of PayPal, which works in over 200 countries, using its own Xoom service. By comparison, Square Cash and Venmo are US-only, Google Wallet only works in the US and India, and Apple Pay Cash works in only in the US for now, though the company is working on expanding its reach, and its companion Apple Pay point-of-sale feature works in many countries.
In a handy consolidation, the PayPal app shows not only your person-to-person activity, but all of your PayPal purchases, even those not made in the app. Other perks are that you can add loyalty cards from a good selection of vendors to save yourself from finding the physical reward-program cards when you pay. There's also a Donations section that lets you find and contribute to charities of your choice.
Also like Venmo, PayPal lets you receive payroll money and government deposits (like tax returns and stimulus checks) through your account. To make this work, PayPal shows you a routing and account number to enter the payer's site.
As with Venmo and Square Cash, you can pay on the iPhone via Siri. At this point, when I tell Siri to pay someone some cash, I get a choice of three apps to complete the payment with. I didn't see PayPal as an option in Apple Messages, the way I did for Venmo, Square Cash, and Apple Pay, however. On Android these integrations are a different story. I couldn't even summon Google Pay with the Siri-equivalent Google Assistant , let alone any third-party payment app. Android's default messaging app varies by phone maker, with Samsung, HTC, and LG, for example choosing different ones of their own, you can't really talk about integrating payment apps into messages.
Security and Privacy With PayPal
One of PayPal's greatest strengths is its PayPal Purchase Protection policy. That's the company's nearly ironclad guarantee that you will either receive the goods and services you bought or get your money back. This adds a layer of protection between your credit card and the vendor. When you buy something with PayPal, even if the purchase price is ultimately going to your credit card, the vendor never gets your credit card details. It's a smart solution to many of the problems with online shopping and potential fraud. It's aces. By contrast, Venmo's legal agreement states, "Venmo does not offer a buyer or seller protection program for transactions conducted using the Venmo app or Venmo.com."
PayPal's site says that the service uses "the latest anti-fraud technology to help make sure your transactions are safer and you're 100% protected against unauthorized payments sent from your account." And indeed the company has been free from the kind of massive break-ins plaguing some other financial services, such as Equifax, JP Morgan, and even the international SWIFT bank transfer system. Occasionally, after an update, the app requires you to reverify yourself for added security. It's come a long way since our last review, when we complained about the app not logging out when you switch away from it.
PayPal's policies prohibit quite a number of activities using its service. It has had accusations of censorship leveled against it from both right-wing groups and those who take umbrage to its self-appointed role as a morality cop when it comes to adult materials and services. Sellers can experience long periods with their money frozen, as well as lifetime bans from the service. While these matters don’t really affect you if you're just using it to pay friends or split payments, it doesn't hurt to be aware of the issues and to know that some take a dim view of the service.
Excellent for Online Shopping & Paying Your Pals
This long-trusted payment tool brings powerful tools to its mobile app in terms of security and capabilities, not to mention the fact that nearly everyone already has a PayPal account. The only things PayPal is really missing are NFC point-of-sale payment, integration with messaging, and a social stream of everyone's payments (if that's your cup of tea). PayPal is convenient, clear to use, multi-platform, and ubiquitous. Our Editors' Choice for payment services, Google Pay, tops PayPal by offering everything PayPal does and adding in-store NFC payments.
PayPal is a convenient, easy to use, and ubiquitous payment platform, both for shopping online and now for paying friends, too, though Venmo still beats it in the latter case.
Like What You're Reading?
Sign up for Lab Report to get the latest reviews and top product advice delivered right to your inbox.
This newsletter may contain advertising, deals, or affiliate links. Subscribing to a newsletter indicates your consent to our Terms of Use and Privacy Policy. You may unsubscribe from the newsletters at any time.
Thanks for signing up!
Your subscription has been confirmed. Keep an eye on your inbox!
Sign up for other newsletters
