VENMO: Everything You Need to Know

It seems like we are asked questions about Venmo almost daily as the app continues to expand their role in financial transactions between individual parties. Venmo was designed for people who know each other to send payments for things like shared meals, quick loans or shared expenses. Venmo has recently expanded to allow businesses to accept payments for goods and services as long as the Venmo account is explicitly authorized as a business profile to be used in business transactions.

Buyer Beware

As a “buyer” using Venmo, you may only use Venmo to pay for goods or services within the app by paying an “authorized business profile”. Personal Venmo accounts may not be used to receive any business, commercial or merchant transactions, from a user for goods or services. If you accept a Venmo payment from someone for goods or services via your personal profile and the buyer didn’t identify a payment as being for goods and services, Venmo may reverse the payment, meaning you could lose both the payment and the item sold. This review process may not occur until after you attempt to transfer the funds out of Venmo and long after the transaction has been completed.

Venmo Issued Advice: “Unless directly given the option by Venmo, DO NOT USE VENMO TO TRANSACT WITH PEOPLE YOU DON’T PERSONALLY KNOW, ESPECIALLY IF THE TRANSACTION INVOLVES THE PURCHASE OR SALE OF A GOOD OR SERVICE (for example, concert tickets, electronic equipment, sneakers, a watch, or other merchandise). These transactions are potentially high risk, are not allowed under Venmo’s User Agreement, and Venmo does not have a protection program for such transactions unless directly offered. 

Merchant Information

While Venmo was intended to be an easy way for friends and family to pay each other and bypass the need for cash or checks on the go, Venmo recently began allowing users to purchase items directly from participating approved business profiles, online stores, and in-store merchants equipped with certain Point of Sale (POS) systems. Venmo payments can be great for personal services such as dog walkers, barbers, gardeners etc. who transact relatively small dollar amounts.

Venmo also offers the ability to accept Venmo payments through PayPal’s online checkout process, where users can select the Venmo payment option in addition to major card brands such as Visa and MasterCard. Keep in mind that this option will not automatically add a separate Venmo payment button on your website unless you are already a PayPal merchant. You can find more information here.

Merchants who have set up a business profile for their Venmo account can use in-store QR codes to accept payments through their POS system. A note of caution, Venmo does not provide support for individual merchant’s POS systems and will not assist you with the setup or problems encountered.

About Merchant Fees

Merchants who have properly setup their Venmo account with a business profile are charged a small fee of 1.9%+$0.10 of each transaction. These fees will only be charged to personal profile recipients when a buyer identifies his payment as being for a good or service. Payments to/from friends on Venmo that are not identified by the sender as payments for goods or services will not incur any fees. 

Venmo is considered a user-to-user money transfer service and up until now has been essentially free to use. However, since PayPal bought Venmo in 2013, the writing is on the wall that PayPal will try to monetize the platform and implement a series of increasing fees for some money transfers.

According to Venmo, on July 20, 2021, Venmo began implementing the fees detailed above for all transactions identified as a goods or services transaction whether or not the account is identified as a business or personal account. This is very similar to the way that PayPal money transfers work. If you’re sending money to a friend or family member it’s free. If it is for business, there is a fee charged to the merchant. 

One More Thing

Beginning last Monday, “instant” transfers from Venmo accounts to bank accounts are now charged a 1.5% fee with a minimum of 25 cents and a maximum of $15. That’s up from the previous 1%/$10 levels. You can expect these fees to continue rising in the future.

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