Fundamentally, nothing really. It's all the same: money moves from one person to another—quickly, instantly, and no fees (unless it's a business transaction)—as long as it doesn't leave the network. But therein lies the rub: money has to leave this network occasionally because you cannot send money peer-to-peer to from PayPal to a merchant not using PayPal (like Amazon), and that is the troublesome part where money has to be ACH'd to bank accounts.
And as such, the p2p ecosystems differentiate themselves by giving people ways to pay merchants without explicitly needing to move that money out of the network. So, Cash App issued a debit card, and then PayPal, and then Venmo (yep, even though it's a subsidiary, it's a separate card). And then some of them started using real bank accounts (with routing/account numbers) to back the stored balance. And the result today is that all these p2p apps look awfully a lot like banks, but less encumbered by regulations because they don't do everything that banks do.
Back to your question, why bother changing to Venmo (or Cash App) when PayPal is basically the same at this point? Obviously, the primary reason would be if everyone you know is using not-PayPal. A secondary reason is the same reason that people have different credit cards from different banks: different rewards schemes (yep, there are incentives for using those p2p debit cards).
Zelle is probably the odd one out here, because it's just an extra thing built on top of existing participating banks that already have all these ways of moving money out of their networks. It's effectively a wire transfer replacement without the fee (or a physical check replacement without the check-writing).
(Disclosure: am employed by a company that has a p2p product.)
> And the result today is that all these p2p apps look awfully a lot like banks, but less encumbered by regulations because they don't do everything that banks do.
They don't just look, they are banks (or has a bank they outsource the regulated activity to). This is a piece they're not too keen on disclosing, except in very tiny print, as they wouldn't like their user to realize they can go and complain to the regulator regulating their companies when they leave their customers high and dry.
> Obviously, the primary reason would be if everyone you know is using not-PayPal.
Where Venmo wins with Zelle and PayPal is the privacy: you don’t have to hand out your email address or phone number — you’re payee only knows your handle.
PayPal have an unfortunate history of seizing people's balances. So it's fine for small amounts, but you shouldn't trust it for large amounts if you can help it.
PayPal is complicated and difficult to use. There are lots of different ways to pay people and they use dark patterns to try and get you to use a method that costs you fees. And this is coming from someone who has used it for 20 years. Venmo is starting down that same road, likely due to it being purchased by PayPal.
