Need the money that’s sitting in your PayPal or Venmo account right away? Withdrawing it quickly is soon going to cost you more.
PayPal, which is the parent company of Venmo, recently said it’s increasing prices for the “instant transfer” feature for both of the popular money-sending apps later this spring. The changes will affect hundreds of millions of accounts.
An instant transfer allows you to cash out the money that’s in your Venmo or PayPal account and send the funds to your bank account or debit card. PayPal and Venmo already charge for this service, and soon instant transfer fees will be even more expensive.
Bear in mind that there's a simple way to avoid instant transfer fees on both apps (besides, you know, using cash). PayPal and Venmo offer a standard transfer option, which remains free, though it may take up to three business days to clear.
The pricing changes go into effect for Venmo customers on May 23, PayPal announced, and PayPal customers will encounter the new fees starting on June 17.
The instant transfer fee announcement comes a month after both apps rolled out a separate new fee structure for crypto transactions.
How Venmo and PayPal fees compare
While the dates of the proposed changes are different, the fee structures will be the same for standard consumer accounts.
Here’s a breakdown:
- PayPal and Venmo’s current instant transfer fees: 1.5% of the amount transferred with a 25-cent minimum and a $15 maximum
- PayPal and Venmo’s upcoming instant transfer fees: 1.75% of the amount transferred with a 25-cent minimum but a new $25 maximum
The proposed fees will exceed what competitors Apple Cash and Cash App typically charge. For instant withdrawals, Apple Cash takes a 1.5% cut, while Cash App fees range between 0.5% and 1.75%.
Similar apps like Zelle and Meta Pay (formerly Facebook Pay) don’t charge these types of fees because the apps don’t hold your funds in a separate account from your linked bank account, so there is no need to “cash out.”
Additional fee changes are slated for PayPal business accounts, as well. Those accounts are currently under the same fee structure as the consumer accounts. Come June 17, businesses will continue to pay 1.5% of the amount transferred, but the minimum fee is jumping to 50 cents, and the maximum fee — currently $15 — will be uncapped entirely.
How does all this shake out in reality? Let’s say you just wrapped up brunch with friends and picked up the tab. Your friends Venmo you their portion of the bill, and you want to cash out that $50 right away. Under the current pricing regime, you’d be charged a 75-cent fee. Not too bad, right?
For that same scenario under the new fee structure, you’ll be charged about 88 cents. It's a subtle increase for smaller withdrawals, but those fees can add up for folks who have thousands of dollars in their accounts that they want to transfer instantly. And it could be an especially big deal for business owners using this feature regularly on PayPal.
This isn't the first fee increase for these apps. Just last June, approximately 70 million Venmo users were hit with an instant transfer fee hike. Before that hike, Venmo charged only 1% of the transfer amount with a $10 max and a 25-cent minimum.
This time around, with PayPal included, the new fees will affect more than 400 million accounts.