Banking Banking Basics Popmoney vs. PayPal Cost, Security, and Features By Justin Pritchard Justin Pritchard Facebook Twitter Website Justin Pritchard, CFP, is a fee-only advisor and an expert on personal finance. He covers banking, loans, investing, mortgages, and more for The Balance. He has an MBA from the University of Colorado, and has worked for credit unions and large financial firms, in addition to writing about personal finance for more than two decades. learn about our editorial policies Updated on July 12, 2021 Reviewed by Charlene Rhinehart Reviewed by Charlene Rhinehart Twitter Website Charlene Rhinehart is an expert in accounting, banking, investing, real estate, and personal finance. She is a CPA, CFE, Chair of the Illinois CPA Society Individual Tax Committee, and was recognized as one of Practice Ignition's Top 50 women in accounting. She is the founder of Wealth Women Daily and an author. learn about our financial review board In This Article View All In This Article What Each Service Is Best At Fees at Popmoney vs. PayPal Availability PayPal Advantages Popmoney Advantages Which Is Best for Shopping? Which Is Safer? Funding Methods The Bottom Line Photo: Getty Images/yuoak Popmoney and PayPal are both tools for sending money to another person—but which is better? Each service provides convenient electronic transfers that eliminate the need for cash, checks, or exact change. Being electronic, these transactions also provide digital records, making it easier (and more environmentally friendly) to track your payment history. While Popmoney and PayPal have many similarities, there are differences, as well. Depending on what you're using the service for, one service may be better suited for your needs than the other. What Each Service Is Best Suited to Do While they both essentially perform the same service, Popmoney and PayPal serve different needs. In general, the differences break down like this: Popmoney works well as a person-to-person (P2P) payment service with people you know and trust. PayPal can handle P2P payments, but it’s perhaps better known as a way to pay strangers, such as for online shopping. Note As you consider these two popular services, remember that you aren't limited to these two options. There are several other ways to send money to people. For example, some banks use Zelle instead of Popmoney. Fees at Popmoney vs. PayPal Fees are modest with Popmoney and PayPal. The cost is typically worth it when you consider postage, the cost of checks, and the value of your time. Still, you should know what you’re paying and whether or not the expenses make sense. If you frequently make transactions, watch out for per-transaction fees that can add up. This partial list of fees is current as of April 19, 2021, but it doesn't cover all the fees that apply to the services. Additional fees may apply in specific circumstances. It's important to read the fee disclosures for each service carefully, especially if you plan on making frequent transactions. If minimizing fees is your primary concern, check out person-to-person alternatives such as Venmo, Cash App, and Zelle. PayPal Fees Overview Purchasing products and services with PayPal is free, regardless of whether you've linked PayPal to your bank account or you use a debit or credit card. If you want to send money to a friend or family member in the U.S., then you will pay a fee of 2.9% plus $0.30. However, you can avoid this fee by using a linked bank account, rather than a debit or credit card. Businesses will pay fees for receiving payments through PayPal. U.S. sales come with a fee of $0.30 plus 2.9% of the transaction. International fees depend on the currency being used. Businesses don't pay an extra fee when customers reverse a payment, but you won't get your original transaction fee refunded. Transferring money from your PayPal account into your bank is free, as long as you can wait a few days. Instant transfers come with an extra fee of 1% of the total transfer, with a maximum charge of $10. Popmoney Fees Overview Receiving money is usually free with Popmoney. Sending money through Popmoney costs $0.95, whether you're using a bank account or debit card. When someone requests money, the fees are reversed. The request costs $0.95 to initiate, but the payer won't pay any fees. The fee is only imposed when the payment is made. If the payee never receives money, they won't pay a fee. Some banks and credit unions integrate Popmoney into their services. This integration can come with extra fees on the bank's end, or the bank may take on Popmoney's fees to give customers a free way to send money. Availability Nearly anybody with a bank account can use both PayPal and Popmoney. That’s one more reason to open a bank account if you haven't already. PayPal Advantages PayPal's advantage is its ubiquity. Not everybody uses a bank or credit union that partners with Popmoney, but PayPal accounts are widespread. If you're trying to pay a friend or family member whose bank doesn't use Popmoney, it may be easier to use PayPal. Popmoney Advantages If your bank partners with Popmoney, the payment process is almost effortless. You don’t need to set up a profile or enter any extra information. Instead, the service is integrated into the banking apps and websites you already use. While it's much more convenient for people with partnering banks, anybody can create a Popmoney profile. Checking, money market, and other transaction accounts work for sending and receiving funds through Popmoney. You can also send money from a debit card account. Savings accounts do not work because federal regulations make savings accounts unsuitable for frequent transactions. Which Is Best for Shopping? If you plan to use your account for online shopping, PayPal is the better option. Online merchants often offer PayPal as a payment method, as do some brick-and-mortar retailers. It's unwise to provide your credit card or debit card information to a website that you don't know well. A PayPal transaction keeps those numbers hidden, and the vendor only sees your username and delivery address. Which Is Safer? Both Popmoney and PayPal use industry-standard security measures to keep your money and personal information safe. That said, data breaches happen. No matter what payment service you use, keep track of your financial accounts and report suspicious activity as soon as you notice it. When buying from a merchant—or a stranger on the internet—PayPal has “purchase protection” for certain transactions. That’s helpful if there’s a dispute with the seller, like when the product is never delivered. Popmoney has strong data protection and verification processes, but it does not offer a "purchase protection" guarantee like PayPal. That makes Popmoney better for transactions with people you trust, rather than unknown merchants. Note Don’t use Popmoney for purchases unless you know exactly where the money is going and you trust the recipient to deliver (the same goes for Venmo). Funding Methods Both Popmoney and PayPal can link to all kinds of funding accounts. Linking a checking account or money market account offers perks for each service, as opposed to linking a credit card or debit card. With PayPal, you can avoid fees by linking a bank account. With Popmoney, the fees are the same, but you can send more money at once with bank account transactions. The Bottom Line Both PayPal and Popmoney have their benefits and drawbacks. The best service depends on how you will use it, and you could end up using both. In general, PayPal is better for online transactions with retailers and unknown merchants. If you need to send money to a friend, family member, or roommate, Popmoney may be the more convenient option, especially if your bank partners with the service. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. PayPal. "Credit Card Fees, Send Money Fees & Other Charges." PayPal. "Credit Card Processing, Transaction & Merchant Account Fees." Popmoney. "Fees and Limits." Board of Governors of the Federal Reserve System. "Regulation D Reserve Requirements," Page 3.