Zelle vs PayPal: a full comparison

Fernando Figueiredo

Zelle or PayPal is a question you may have found yourself asking if you’ve been working out how to pay a friend.

Though PayPal is a major player when it comes to online payments in general, it competes with Zelle in the specific area of peer-to-peer payment, where both are popular options.

That’s why in this article you’ll find out how the two of them compare. You’ll also meet Wise and how it compares to PayPal as a way to pay and send money online and internationally.

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Zelle vs PayPal: peer-to-peer payments

Zelle and PayPal offer ways you can make peer-to-peer (P2P) payments and they’re some of the biggest names in the field. These are payments that you make to a friend, family member or even a merchant, simply by using your phone or laptop.

Typically, an app will connect to your bank account or credit/debit card, and within the app you can select a phone contact to pay, without having to exchange bank details.

But they all operate in slightly different ways – as you’ll soon see. Here’s a quick intro on all of them:


PayPal was established in 1998, being the first P2P service. In 2002 it was acquired by eBay until 2015, and also in 2015 it acquired Xoom, a company to send money online. PayPal is the most popular P2P company worldwide, with services like PayPal me, which makes peer-to-peer payments easier. With around than 325 million active customers in 2021, it’s used for personal payments, but also very popular amongst online shoppers, merchants and platforms like eBay, for its commercial transactions. You can PayPal either from your laptop or from your phone.


Zelle was initially founded in 2011 as clearXchange, having changed its name to the current one in 2017. It focus on partnerships with financial institutions from the US, integrating their instant payment service within other institutions' apps. E.g.: a banks’ clients sends the money with their online banking, but through Zelle’s own service. Zelle recommends its customers to use the app only for finantial transactions with people that they know, hence it might not be the best soilution for commercial transactions.

Zelle vs PayPal: key differences

Let’s begin with an overview of the key points of difference between PayPal and Zelle, before we drill down into what those differences really mean.

Service Zelle PayPal
Works via Zelle app, or your bank’s app if they participate PayPal app or web
Pay by Debit card, or direct from bank account Debit/credit card, ACH, PayPal account
Recipient details Email or mobile number Name, email, mobile number, or PayPal.Me link
Is there a wallet option? No Yes
Fees to send money None – but your bank/credit union may charge one 3% credit card transaction fee; 1% fee for fast transfer
International payments Not possible Possible but watch out for fees

Wise: save on international payments

These are the key points of difference – so let’s look at them one by one.

How do Zelle and PayPal work?

First of all you’ll need to register for an account with Zelle or PayPal. But after that step, some differences emerge straight away.

For easy P2P payments via PayPal, you should get the PayPal app. But with Zelle, you might not have to – if your bank is one of the many that Zelle works with, you can actually just use their standard banking app¹.

If you have a bank account with Bank of America, Capital One, Chase, Citi, or Wells Fargo – to take just a few of the bigger ones² – Zelle can connect directly to your account, and you should be able to use the bank’s app, rather than Zelle’s, to make the payment. That’s a handy feature.

On the other hand, so many people already have a PayPal account anyway, that PayPal certainly scores highly for convenience as well.

How do you pay with Zelle and PayPal?

With Zelle, you can either connect directly to your bank account (so long as your bank participates) or you can use a debit card tied to a US bank account. Credit cards won’t work, and nor will business debit cards, international cards, or prepaid cards from outside Zelle’s network³.

PayPal is a little bit more versatile here. You can directly link your PayPal account to your bank account, you can use credit or debit cards, or you can use money stored in PayPal itself⁴. Watch out for the fees, though, which we’ll go into below.

What info does the recipient need to provide?

With Zelle, the payee needs to give you their email address or U.S. mobile number¹. They need to have a U.S. bank account¹, but they don’t need to be signed up to Zelle already. If they’re not, they’ll have to register in order to access the money⁵.

It’s similar with PayPal – the recipient just needs to provide their email or mobile number. Again, a PayPal account is necessary before the recipient can access the cash⁶.

PayPal offers an alternative method with P2P payments in mind. With PayPal.Me, the recipient can create a shareable link that they can pass on to whoever needs to pay them. So in that case you don’t even need their email or mobile number – just the link⁷.

Zelle vs PayPal: do they have digital wallets?

Zelle is unusual compared to many P2P options because, no, it doesn’t have a digital wallet. The money goes straight to your linked bank account⁸.

PayPal, on the other hand, very much does have a wallet option – your money sits in PayPal until you choose to send it on to your own bank account. Or you can leave it in the PayPal account and use it for future payments⁹.

But to get the money sent to your account quickly, PayPal does charge a fee – as you’ll find out next⁹.

What are the Zelle and PayPal fees?

Zelle doesn’t charge you a fee for its service – sending and receiving money with Zelle is free.

However, there’s a chance that your bank or credit union might charge a fee for using Zelle, so you’ll have to check directly with them¹⁰.

There’s a range of PayPal fees that you might face when making P2P payments, including:

  • Domestic personal transaction fee – if you pay friends and family by card, the fee is 2.9% plus $0.30 (if it’s a USD transaction)¹¹ ¹².
  • Withdrawing your balance to a bank account – to a local USD bank account there’s no fee, unless you require an instant transfer, in which case it’s 1.5% up to a max of $15¹¹.
  • Withdrawing your balance to a card – instant withdrawal to a card is 1.5% up to a max of $15¹¹.
  • There are also fees associated with international payments and currency conversion – as you’ll see below.

If you’re happy with a bank account transfer that might take just a little time, you should be able to avoid most of these PayPal fees – so long as the transfer is U.S.-based.

Zelle vs PayPal: international payments

Zelle is U.S. only – both the sender and the recipient need to have bank accounts that are based in the U.S.¹³

PayPal is very different in this regard – there are more than 200 countries and regions where you can use it.¹⁴

The thing you have to watch out for, though, is PayPal’s international fees. Sending an international personal transaction costs 5%, with a minimum fee of $0.99 and a max of $4.99, plus a fixed fee if you use a card¹¹.

Plus there’s the issue of currency conversion. If it has to convert a payment into another currency it’ll mark up the exchange rate by either 3% or 4%¹¹, which means more money you’ll have to pay to have your money converted.

So, despite its convenience and its global reach, PayPal won’t be the cheapest way to send money abroad.

Here’s a quick comparison between PayPal and Wise to send money abroad from your bank account:

Wise PayPal
Fee for sending US$1,000 to EUR US$6.40 US$4.99
Exchange rate mark-up 0 US$40 (4%)
Total cost US$6.40 US$44.99

Need to send money abroad or manage different currencies? Meet Wise.

With Wise, you can manage your finances not only in USD, but also in different currencies:

  • Send money and receive money from abroad with very low cost
  • Get bank details in EUR, USD, CAD and other currencies
  • Spend and receive in the local currency

By using Wise, you avoid the markup in the currency exchange, and you simply pay a small conversion fee shown upfront. With no surprises.

Wise: start saving today

Zelle and PayPal alternatives

So there are the key differences between Zelle and PayPal when it comes to peer-to-peer payments.

Granted, that’s a lot of information to take in, especially if all you want to do is split a cafe bill with a friend. But do remember that you have other options too.

Venmo, which is actually owned by PayPal, offers another popular way to pay friends easily. There’s also Cash App, Google Pay, Apple Pay and even Facebook Messenger.

And if you’re looking into international transactions, Zelle isn’t an option at all, while PayPal’s considerable fee schedule may encourage you to look elsewhere. Compare Wise vs PayPal, for instance, to see if there’s a cheaper way.


1.Zelle homepage
2.Zelle: get-started
3.Zelle page: card details don't seem to be working
4.PayPal: what payment methods can I use with PayPal
5.Zelle: what if the person I'm sending money hasn't enrolled with Zelle?
6.PayPal: how to receive money through PayPal?
7.Paypal page to send money
8.Zelle: what is Zelle
9.PayPal: getting started with PayPal
10.Zelle: fees
11.PayPal: fees
12.PayPal: personal fixed fee
13.Zelle: can I use Zelle internationally?
14.PayPal: what services are available in my country?

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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