Does venmo work with business accounts -
📱Here’s What You Need to Know About Venmo
69% of smartphone users prefer using an app over a mobile site to transfer money to an individual. And, with so many money transfer apps on the market, consumers ultimately have a lot of choices when it comes time to download a finance app that will help make money transfers safe and easy.
It’s never been easier to send and receive money straight from your phone without having to worry about carrying physical cash. From splitting the dinner bill to paying your friend for your share of the rent, there’s a lot you can do with a transfer app like Zelle, Venmo, or even PayPal.
We’ll be exploring some of the most popular money transfer apps and all of their features and functions. Here it comes Venmo.
What is Venmo?
Chances are that if you’ve only heard of one money transfer app, it’s likely been Venmo. It's a mobile payment service. In fact, the app has become so popular now that it’s even become a verb for sending money to friends. “Just Venmo me the money” is something heard amongst younger social circles nowadays. And, the company has capitalized on the social nature of its app.
The company notes that “At its core, Venmo provides a social way to pay your friends when you owe them money and don't want to deal with cash.” It’s this uniquely social aspect that’s made it so popular for individual use, as opposed to PayPal which is used largely by businesses. You can use it to do things like split a lunch bill, pay for your half of a cab, pay your roommate for rent, or even as a payment method in authorized partner apps.
How Does Venmo Work?
When signing up for a Venmo account you’ll be asked to decide how you want to pay people as well as asked to set up a funding source. It allows you to source money from a credit or debit card, a US bank account, and even by using your Venmo balance. A Venmo balance refers to the money you’ve received from other Venmo users. This means that if you haven’t signed up with your bank information, you can technically still pay others with money in your Venmo balance.
Venmo also provide its own debit card for users to earn special rewards called Venmo card. Its parent company is PayPal and Venmo is designed to make money transfer easy and efficient with no Venmo transfer fee.
The Venmo login is quite simple and straightforward and the app is very intuitive and easy to use, compared to other payment apps and money transfer platforms, at least. Once you’ve accessed the Venmo sign-in page, all you have to do is choose who you want to send money to, enter the amount, and complete the transfer. If you’re receiving the transfer, you can either leave it in your Venmo balance or transfer it to your bank account. You cannot, however, transfer it to a credit card. This time, we will show you how does Venmo work and how to put and receive money on Venmo.
What Banks Use Venmo?
Venmo allows credit, debit and prepaid, network branded (American Express, Discover, MasterCard, Visa, etc.) cards registered under your name to be added to your Venmo account for payments. This means that it should work with any US bank.
It’s important to note, however, that the creation and popularity of it are what initially led banks to develop Zelle. Backed by 30 major banks, the other payment transfer app allows you to easily transfer and receive money directly within your normal banking app. Venmo requires you to download the actual app and isn’t actually backed by banks themselves.
What Are the Venmo Fees?
Venmo fees? Similar to Zelle and PayPal, there are no fees for using Venmo as a normal payment transfer service. Setting up an Venmo account and keeping it active both incur zero fees. And, there are also zero fees for sending people money via your bank account or debit card, or Venmo balance. Can you use a credit card on Venmo to send money? Yes, you can. But you will incur a 3% charge if you wish to send money via a credit card, however.
When it comes time to withdraw your money and transfer money from Venmo to bank account, you’ll notice that an Instant Venmo Transfer comes with a 1% fee. If you can, it’s best to opt for the free option. There is no fee to transfer money from your Venmo account to your bank account with the standard option and the money is typically available in 1-3 business days.
Because PayPal is the parent company of Venmo, you’ll notice similar transfer limits between the two platforms, with both requiring verifications for larger limits. As for Venmo weekly transfer limit, according to the Venmo transfer limits page, your person-to-person sending limit is $299.99 if you haven’t been verified. Once we have confirmed your identity, your weekly transfer limit is $4,999.99.
What Currencies Can You Use with Venmo?
Unfortunately, you can’t send money abroad with Venmo. This is something you’ll notice when setting up your account. The platform’s FAQ section also notes that there are two main requirements for using Venmo:
- You must be physically located in the United States
- You must have a U.S. cell phone that can send or receive text messages. You will need this to complete your sign-up process.
What does this mean in terms of support? Well, because the money transfer app is designed only for use for those residing in the United States, support is also limited. Currently, Venmo customer support appears to only be in English, with some of the online help forums also existing in Spanish.
Is Venmo Safe?
Venmo is safe, yes. How safe is Venmo? The main risk is the same for other payment and money transfer apps in that you’re running the risk of someone hacking your phone and accessing your financial information via the app. Venmo works to reduce such security risks by offering you the ability to add a PIN to your Venmo account. This is a great precaution to take on top of ensuring that your phone is locked with a high-security PIN to prevent anybody from accessing sensitive information. Moreover, it's also safe to transfer your money on Venmo even without bank account connected.
Also, you should immediately transfer any money you receive to your actual bank account. Avoid leaving lots of cash in your Venmo balance that someone could enter and withdraw or move around.
What About the Venmo Card?
Venmo is one of the few payment transfer apps that has its own special card. The Venmo card is a great option for those interested in earn rewards and cashback. It’s a Mastercard debit card, not a credit card, and it allows you to earn cashback through a new rewards program powered by Dosh. When paying at select retailers, such as Sam’s Club, Sephora, and Target, you can receive up to 5% cashback on your purchase if you pay with a Venmo card.
It works in the same way that a Revolut card might work in that you’ll have to transfer money to the Venmo card via your authorized bank. However, it otherwise works like a regular debit card, allowing you to withdraw cash from ATMs and perform other similar tasks that you might do with a debit card from your regular bank.
It’s worth noting that while there are no fees associated with the card, withdrawing money at a non-MoneyPass ATM will incur a $2.50 ATM Domestic Withdrawal fee. Looking for the Venmo credit card? It’s slated to be released this year!
Another Great Debit Card Option
Transferring money to and from friends and other people is made easy with money transfer apps such as PayPal, Zelle, and Venmo. And while some of these apps are developing their own debit cards with built-in rewards, such as the Venmo card, it’s best to opt for a debit card that’s truly optimized for your savings goas.
While the cashback options are great with the Venmo card, they’re currently only designed for rewards if you spend money at certain retailers. The Cheese Debit Card allows you to earn cashback on all spending, not just with select retailers.
No banking fees, high cashback rates, and even the chance to earn multiple Cheese Rewards? It’s as good as it sounds.Check out the other perks:
❌ No Monthly Fee 🧀️ No SSN Required
❌ No ATM Fee 🧀️ $5 Signup Bonus
❌ No Overdraft Fee 🧀️ No Incoming Wire Transfer Fee
❌ No Insufficient Fund Fee 🧀️ Up to 3% Saving Bonus
❌ No Minimum Balance Requirement 🧀️ Early Paycheck
❌ No Int. Incoming Wire Transfer Fee 🔐 FDIC Insured
For More Money Transfer Apps Review:
📱Here’s What You Need to Know About PayPal
📱Here’s What You Need to Know About Zelle
Venmo is paying closer attention to what’s being paid for on Venmo
Next time you Venmo a friend of a friend for a concert ticket, the app would like you to give it a cut of the action.
Last week, Venmo announced a new way for users to conduct “goods and services transactions,” giving people with personal accounts the ability to toggle between transaction types. Venmo takes a 1.9% cut of commercial transactions—previously only applicable to registered businesses—plus a 10-cent fee. In exchange, those transactions are entitled to payment protection. So if you’re selling a couch and want the buyer to pay via Venmo, you can flip a switch, pay a fee, and protect both parties in case of a dispute.
The app is zeroing in on a gray area familiar to many of its customers. Venmo’s user agreement states that personal accounts may not be used to conduct business, including paying for “concert tickets, electronic equipment, sneakers, a watch, or other merchandise, deposits for apartments, or dog walking.” But it’s unclear how many Venmo users break those rules—it’s common, for example, to pay a babysitter via Venmo—or what Venmo might be doing to better identify anyone gaming the system. The company declined to comment on how it monitors transactions, many of which are categorized only by sparse descriptions or a single emoji.
“While accounts could potentially be suspended or terminated, Venmo’s focus is on educating customers…on the value, protections, and benefits that the goods and services payment options provides,” a spokesperson told Quartz. In a June 28 press release, Venmo parent PayPal noted that more than half of respondents to a 2020 user survey said “they would be most likely to make a purchase from someone they don’t know if their transaction provided purchase protection.”
To be sure, payment protection is an important facet of e-commerce, and should be a staple on peer-to-peer payment apps. But asking individuals to pay a fee for pseudo-business transactions—the spokesperson offered the examples of selling concert tickets to an acquaintance or purchasing a couch from a local ad listing—could also be indicative of a more basic goal. Venmo, which has 70 million users and makes all its money on fees, still doesn’t turn a profit.
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Venmo vs. PayPal: Accessibility
PayPal and Venmo both have their own free apps for iOS and Android, which is where most users will go to use each service. They both also have browser-based desktop versions. However, Venmo payments can only be initiated with the mobile app, whereas PayPal payments can be made through the app or the website.
PayPal can also be used as payment with a wide variety of online merchants, and even for QR code purchases in-store. Though Venmo is working to build up this merchant transaction capability among more retailers, its reach is currently very limited compared to PayPal’s very expansive footprint.
Venmo vs. PayPal: Sending Money
The process to send money to someone is fairly similar across the two apps. Both offer the ability to sync your contacts to the app, enabling it to search for any associated PayPal or Venmo accounts held by your friends and family. But even if the app doesn’t surface the contact you’re looking for, you can send money using their username, email address, or mobile number.
After choosing the recipient and the amount, both PayPal and Venmo will ask you what payment method you’d like to use. If you have a positive balance with either service, you can use those funds for your payment. Otherwise, funds will be drawn from the bank account, debit card, or credit card you identify as your desired payment method for this transaction.
Once you hit send on your payment, the amount will hit the user’s PayPal or Venmo balance within a couple of minutes, often even seconds. With both apps, you’ll want to make doubly sure you’re sending money to the right contact, since the companies won’t refund your money if you send it to the wrong person.
Venmo vs. PayPal: Requesting Money
It‘s also possible with both PayPal and Venmo to receive funds from someone. With Venmo, you can request funds from another person, creating a reminder for someone to pay you, or to provide them with easy access to your contact info and the proper amount of the requested payment. PayPal simply provides a platform through which someone can easily send you money, but it does not have a "request" feature like Venmo does.
Once the person receiving your request for money acts on it by making a payment, the funds will hit your PayPal or Venmo balance almost instantaneously. From there, you can use those funds to make a subsequent payment (or, with PayPal, a merchant purchase), keep them sitting in your account for later use, or transfer them out to your linked bank account.
If you opt to transfer funds to your bank, both PayPal and Venmo give you the further option of how quickly to complete the transfer. Without a fee, you can choose a transfer that will generally be completed the following day, but can take up to two to three days for either app. If you’re in a rush, Venmo allows you to choose an instant transfer for a small fee.
Venmo vs. PayPal: Fees
Fees for the two services are fairly similar. Both offer free payments from linked bank accounts, and both charge about 3% for payments from a credit card. Where they differ slightly is that Venmo extends its no-fee option to payments made from debit cards, while PayPal only allows free payments directly from a bank account. For debit and credit card payments, PayPal’s fee is technically 2.9% plus 30 cents.
One exception to the fee on payments made with a credit card is on payments made via American Express. Through a very new development, American Express is offering free payments through both PayPal and Venmo, though the payment has to be initiated through the American Express app instead of using the PayPal or Venmo apps. But doing so enables users to pay with a credit card and avoid the roughly 3% fee on that transaction.
How quickly you want to transfer accumulated money from your PayPal or Venmo balance to your bank account also has free options on both platforms. Both Venmo and PayPal allow you to choose a standard transfer speed of one to three days for free, or to upgrade your transfer to take place within seconds for a fee of 1.5% of the money transferred. Both services cap the transfer fee at $15 and stipulate a minimum charge of 25 cents.
When using PayPal as a merchant collecting payments from customers, PayPal offers a number of different pricing options. Meanwhile, Venmo is not geared toward merchant business transactions, and has a transaction limit if it sees users are treating a personal account as a business account.
Venmo vs. PayPal: Limits
For those wanting to make very large transfers, PayPal offers a strong advantage. Single payments are generally allowed up to $10,000 each, with a total cap of $60,000. That’s significantly higher than Venmo’s limit of $6,999.99 per seven-day rolling period, including a maximum of $4,999.99 in person-to-person payments. On top of lower limits, Venmo also requires an identity verification step to access these limits. Until then, the maximum transaction amount is capped at $299.99.
Venmo vs. PayPal: Additional Features
As you can see, the two services present fairly similarly on basic features and fee structures. But there are a few areas in which the two apps differ markedly. For instance, with its strong focus on transactions between people who know each other personally, Venmo hosts a social feed of transactions that have taken place among people you know, as well as those of strangers, if you opt to view the public feed.
A scroll through the feed of transactions by your Venmo friends will show you who paid who, and with whatever note they shared. The only thing missing is the amount. The feed also supports emojis, which are almost more common than text in the Venmo social feed. When you make your own transactions in the app, sharing them publicly is the default, but you can change this to viewable only by your Venmo friends or only by the recipient, either globally or on a transaction-by-transaction basis.
Where PayPal stands out against Venmo is in its ability to be used by merchant sellers who are accepting payments, as well as shoppers and buyers at online and physical retailers. Originally established as the payments provider for eBay, PayPal excels in enabling transactions between people who don’t know each other, including offering protections for both sellers and buyers that Venmo doesn’t provide.
PayPal also offers international transactions. Covering more than 200 countries and transacting in about 25 different currencies, PayPal is the app of choice for those who want to pay or accept funds from those outside the U.S. In contrast, Venmo can only be used for U.S. exchanges.
Lastly, both Venmo and PayPal offer their own credit and debit cards, although Venmo’s offering in this area is nascent. By acquiring a debit or credit card, payments to anyone accepting that card type can be charged directly to your PayPal or Venmo account.
Venmo vs. PayPal: Business Features
Further cementing its reputation as the digital payments app of choice for merchants, PayPal offers a plethora of small business tools that are entirely absent in Venmo’s more person-to-person focused business model.
For instance, merchants who establish a PayPal Business account can use the service to essentially set up the financial transaction side of selling items online, making it easy to accept credit and debit card payments from all over the world. In exchange for this capability, merchants agree to a small percentage fee being subtracted on each transaction.
But PayPal’s support for small businesses goes far beyond accepting payments. PayPal Business also offers help with invoicing, product shipping, and marketing insights. Some services are included in the basic business package, while others are available to those with a PayPal Payments Pro account, which carries a monthly maintenance fee.
Growing businesses looking to scale can also benefit from PayPal’s provision of working capital and business loans.
Venmo vs. PayPal: Reviews
On both the Apple App Store and the Google Play store, the Venmo and PayPal apps receive similarly high marks: each app was ranked four stars or above on both Apple App Store and Google Play store. Ease of use is a significant driver in the favorable ratings, with both apps being well-designed and enabling payments and requests with just a few easy clicks.
Venmo vs. PayPal FAQs
What Are Venmo and PayPal?
PayPal and Venmo are both digital payment vehicles, largely operated as smartphone apps. In the same way that writing a check draws funds for a payment from a linked bank account, making a payment with Venmo or PayPal does the same, but with two modern differences.
First, when making a Venmo or PayPal payment, the user can choose where the funds will be taken from, whether it’s the user’s primary checking account, a secondary savings account, a debit card, or a credit card. Second, the transfer of funds happens essentially instantaneously, unlike checks that must be cashed, and that can bounce for insufficient funds.
PayPal is the pioneer in this field, having been established in the late 1990s and then soon after becoming the payment tool that facilitated millions of eBay transactions. Venmo, in contrast, is the new kid on the block, though a popular one. Founded in 2009, Venmo was acquired two years later by Braintree, and then by PayPal in 2013.
How Do Venmo and PayPal Work?
The basic functionality and setup of both services are the same. You create a free account with the service, establishing your security credentials. You then link at least one bank account for transfers and optionally add other payment methods, like additional bank accounts or debit and credit cards.
When you’re ready to pay someone, you enter or search for their contact info, enter the amount to pay, and choose the payment method you’d like to use for the charge. Venmo includes a button to request funds instead of sending them — PayPal does not have a "request" button, but still allows you to receive funds.
PayPal and Venmo fund your payments by creating ACH transfers to and from your linked bank account, while those opting to use a debit or credit card will see the payment amount added to your statement like any other purchase.
Who Should Use Venmo or PayPal?
For those making primarily personal payments to someone they know and trust, Venmo is the ideal choice. With its social interface, making payments with Venmo and seeing exchanges among your contacts feels like a friendly and personable arena.
PayPal can also be used for paying your friends and family. Whichever platform is best for you will depend on which one more of your contacts are using.
But if you’re selling products, or are regularly paying for online purchases, a PayPal account will serve you much better. Though Venmo has begun to establish a Venmo Business account, it is still a fledgling service.
In contrast, PayPal has been serving merchants and small businesses for more than two decades, and offers the richest menu of merchant supports of any digital payment app.
How We Evaluated Venmo vs. PayPal
To help you understand when each of the two digital payment apps makes the most sense, we delved into PayPal’s and Venmo’s terms on features, payment transaction fees, bank transfer fees, transaction limits, and business/merchant offerings. By laying out a head-to-head comparison on these aspects, it should be easy to see which app will best serve your different needs, or possibly concluding that the best option is to have an account with each.
If you’re like most small business owners, you keep a close eye on the fees that rack up when you’re getting paid.
I don’t blame you. Those little fees add up to a lot when everything is tallied up at the end of the year. As your business grows and the fees continue to climb, the next logical step is to find a way to avoid them, right?
While there are many ways that you can lower your processing fees, if you’ve completely eliminated the fees, you’re most likely breaking the terms of service for the processor you’re using. Payment processors like Venmo and PayPal Friends and Family offer transaction free options, but they are NOT for business.
Ask around enough and I’m willing to bet that you know someone who has had their Venmo or PayPal account locked because they violated the terms of service, or they have been a victim of a Venmo scam because there are no buyer or seller protection on their platform.
Both PayPal Friends and Family and Venmo have strict rules on how you can use their service, so to answer your question:
- No, you CANNOT use Venmo to accept payment from (or send payment to) another user for a good or service.
- No, you CANNOT use PayPal Friends and Family to accept payment from (or send payment to) another user for a good or service.
Not only are you breaking the terms of service by using Venmo for business, but if you use a bookkeeping software like QuickBooks or Freshbooks you’re going to want to kick yourself when you categorize your payments because NONE of the details from the transaction are imported into these systems.
Instead of trying to completely eliminate these fees, I recommend taking the following steps.
- Request that your client pays you via ACH or E-Check. ACH and E-Check payments generally have lower fees than your typical credit card processor, and many business management suites (like Dubsado) make it easy for you to collect payment via these options.
- Build the cost of credit card processing into your fees. Yes, you would still be paying the fees, but this will allow you to maintain your profit margins and offer credit card processing as an option. Note: This does not mean add an additional fee for clients who use credit cards. This means upping your price for everyone.
Should I accept checks or cash?
You may have noticed that I did not recommend accepting cash or paper checks. There are three main reasons why I do not recommend these options: they are inconvenient, it adds additional manual labor to your bookkeeping process, and it takes the client longer to settle the invoice.
Think about it – when is the last time you had your checkbook ready to make a payment? I literally have to open a safe to write a check, and once I have the check ready I have to find a stamp. And I know I’m not the only one who finds checks inconvenient. My first year in business I requested that clients paid me via check and it took them four to five times longer to pay invoices, and it really put a bind in the cash flow. Cashflow is of supreme importance for small businesses. Without cash flow in your creative business, you can’t pay the bills, pay your people, pay your taxes and pay yourself.
No matter what payment processor you use, be sure to keep your bookkeeping up-to-date and track your expenses, so you can make smart decisions about the future of your business.
How in the World Does Venmo Make Money?
It doesn’t directly bring in much revenue now. But thanks to its silly-seeming social feed, that might soon change.
By Joe Pinsker
Every year, billions of dollars change hands in needlessly clumsy ways. Parents realize they’re short on cash and go out of their way to stop at an ATM so they can pay their babysitter; grandparents mail checks as birthday gifts, which take days to arrive and days to clear. Even as more and more of life is lived through a screen, paper is still how the vast majority of Americans give each other money.
In the past few years, a handful of tech companies have recognized these inefficiencies, introducing apps—such as Circle Pay, Square Cash, and Venmo—that let users transfer money to one another’s bank accounts using their phones, relatively frictionlessly. Among other things, they let users enter their bank-account information and then transfer money to others who have done the same. With Venmo, one of the more popular of these services, there is an additional wrinkle: Once money is transferred, the exchange shows up in the app’s social feed, a running record of who went out for drinks with whom, or whose roommate pays the electricity bill each month. (Users can elect to make a transfer private, but most don’t.) The app has among many—mostly young, city-dwelling people—attained a level of linguistic uptake reserved for the likes of Google and Uber: “Just Venmo me,” they say, after picking up a dinner bill.
The feature that sets Venmo apart is the social feed, which brings transparency to a class of transactions that used to be entirely private. The feed—an emoji-laden stream of often-indecipherable payment descriptions and inside jokes—seems frivolous; it is not a social-media destination in the way that Facebook or Twitter is. But as a public record, it is quite revealing of social dynamics—who’s hanging out with whom, and perhaps where. A friend of mine told me that Venmo proved invaluable in trying to determine if her ex and his new girlfriend were still dating.
In other words, pointless and goofy as it seems, people do pay attention to what they see in Venmo’s feed. And there’s actually a way this parade of public transactions might give the app a significant advantage over its many competitors.
The reason, says Richard Crone, who runs a payments-focused firm called Crone Consulting, has to do with how Venmo makes money—or, more precisely, how it will make money. Currently, Venmo doesn’t directly generate all that much revenue for the company that owns it, PayPal. (Contrary to what some of its users may have guessed, the app doesn’t make money “on the float”—that is, by investing whatever funds users keep as a positive balance in their Venmo accounts.)
Things could look different not too long from now. Venmo’s plan, which it has already initiated and will expand in the coming year, is to facilitate more transactions between businesses and their customers. Last summer, Venmo introduced partnerships with about a dozen apps (including the food-delivery service Munchery and the fast-food chain White Castle) that now let users pay straight from their Venmo accounts. The idea, Crone explains, is that Venmo would take a cut—its standard rate is 2.9 percent plus a small flat fee, which is at the higher end of what merchants pay for a typical credit-card transaction—of not just in-app purchases like these, but of in-person transactions at physical checkout counters, where customers spend trillions of dollars a year.
This is where the social feed comes in. “You walk into any retailer, any restaurant, any service provider—what do they want you to do? Like them on Facebook, follow them on Twitter,” Crone says. Working with retailers would give Venmo a business model similar to credit-card issuers and processors—“but with much more upside,” he says, “because the retailers spend far more trying to get you to like them on Facebook and follow them on Twitter and all these other things that they could just get as a byproduct of the payment.” That is, if someone paid for a taco using Venmo, their friends might see where they ate lunch.
One limit on this strategy’s effectiveness is that consumers might not be eager to publicize every one of their purchases. But Venmo is aware of this: In the year or so since it started trying its service out with a few businesses, the default setting has been for payments not to be shared in the social feed. Still, Bill Ready, PayPal’s chief operating officer, recently toldBarron’s that when the initiative is expanded, “social aspects will be not only present, but also be what’s most attractive to our users.” And Fast Company has reported that a job-application prompt for prospective Venmo employees last year mentioned research finding that “Venmo users are more open to purchasing at new businesses … that they learn about from friends on Venmo.”
But the other, even more lucrative aspect of becoming merchants’ preferred means of payment is access to information about where customers are spending their money. “The real value is in the data, and the ability to render customized ads and offers, and generate a revenue stream from that,” Crone says. “We estimate that the value of mobile payments per enrolled active account is worth more than $400 per year in revenue, to whoever does it—Venmo, Apple Pay, Android Pay, Samsung Pay, a bank, Visa, or Mastercard."
If Venmo or another service were to gain access to this payment data, the typical recipients of it would start missing out. Even though digital-payments apps are built on top of banks’ infrastructure, banks wouldn’t see the details of consumers’ spending, but instead just requests from an app to add or withdraw money from an account. Referring to the value of owning the platform that consumers directly interact with, Crone says, “The one who enrolls is the one who controls”—a phrase he went on to repeat five times in one conversation I had with him.Venmo’s social feed is something that banks would by their nature have trouble reproducing.
Crone thinks that banks are worried about Venmo’s ambitions. Banks have rightly recognized that convenience, affordability, and ease of use are not characteristics that appeal uniquely to 20-somethings, and so they have in recent years collaborated on a payment platform that does more or less what Venmo does. The product of that collaboration, called Zelle, began showing up last month on the screens of tens of millions of Americans who use mobile-banking apps on their phones.
Zelle differs from Venmo in three important ways. The first is that Zelle appears within users’ banking apps, as opposed to being an app all its own. The second is a consequence of the first: Because Zelle was developed by banks and appears in their apps, transfers will register in users’ bank accounts in minutes, whereas with Venmo, that currently takes days. (Zelle’s association with banks is also a selling point when it comes to security, which Venmo has in the past gotten some bad publicity for, but has since seemed to have gotten under control.) Third, Zelle lacks Venmo’s performative social component.
And, technically speaking, Zelle is not new—the name and the bright purple buttons reading “Send,” “Request,” and “Split” are just the consistent branding given to a payments platform called clearXchange that banks have been using, under other names, for years. In fact, last year, clearXchange processed about $175 million in payments per day, while Venmo’s daily rate was only $54 million. Still, the pre-Zelle clearXchange, which wasn’t given a consistent name or look across banks, left room for more-intuitive apps like Venmo to claim a chunk of the market. They had plenty of time to do that, given how long it took for more than 30 banks, normally in competition with each other, to cooperate and release a cohesive product.
Looking to the future, Crone notes that Venmo’s social feed is something that banks would by their nature have trouble reproducing. “You expect your bank to keep things private,” he says. “With Venmo, you expect them to publicly post.” (When I talked to Melissa Lowry, the vice president of marketing and branding at Early Warning, the industry group that helped develop Zelle, she said that Zelle could add a social component down the line, if banks decided that was something they wanted.)
Of course, because of its reputation for security and privacy, Zelle is arguably much better positioned than Venmo to handle business-to-consumer disbursements, such as when, instead of sending a check, an insurance company transfers a customer money for making car repairs, or when a market-research firm compensates people for participating in a focus group. ClearXchange has already been handling such payments, and it’s not hard to imagine people using Venmo at a fancy restaurant to broadcast their good taste and Zelle for payments that say less about their social status than they do about mundane financial chores.
And at the moment, Venmo’s ability to capitalize on its social dimension is far from certain. When I asked Talie Baker, a senior researcher at Aite Group, about what Crone observed, she wrote in an email, “I think it’s a good point he makes that companies won’t mind the transaction fees with the built-in advertising BUT, consumers LOVE their credit cards.” (That said, PayPal appears ready to work with credit-card companies in order to gain a foothold at physical checkouts.)
An additional wrinkle, of course, is Venmo depends on banks’ payment systems in order to function, so it might be hesitant about encroaching too much on their revenue streams. But if Venmo started getting a larger market share than the banks are comfortable with, would they try to do something about it? “That'd be a pretty dangerous and bold move,” Crone says. He adds that in some ways the banks actually don’t mind that services like Venmo have gotten bigger, because they have the banks processing payments that they wouldn’t have processed otherwise. “If they are not able to position themselves in the social sphere of payments,” he says, “then they'll still participate in the back-end plumbing."
After the announcement last month of Zelle’s impending rollout, a number of media outlets presented it as a direct competitor to Venmo. Reuters called it banks’ “answer” to Venmo. Engadget said that Zelle is “tak[ing] on” Venmo. Bloomberg went so far as to wonder if the app was a “Venmo killer.”
In truth, the dynamic between the two payment platforms will not be quite so oppositional; paper money and checks are still so prevalent that Zelle and Venmo could both gain immense popularity and still not run up against each other for many years. Crone thinks the most likely outcome is that the various companies involved with payments will end up cooperating as much as they compete. “There won’t be one mobile payment to rule them all,” he says. As much competition as there currently seems to be, the future that both Crone and Baker foresee for digital payments leaves plenty of room for emoji—and more ☮️ than ⚔, at that.
How To Use Venmo for Business
Providing customers with accessible, easy-to-use methods for payment is an important concern for small business owners. Venmo is one such method that has now become a go-to app for money transfers. If you’re wondering if Venmo is a good fit for your business, read on to find out what it exactly is, how to use Venmo for business, its business profile features, and the answers to some frequently asked questions.
- Venmo’s personal accounts are intended for use by individuals. Venmo can’t be used for business transactions unless the seller has a business profile, or the transaction is identified as being for goods and services.
- You can set up a business profile to use Venmo for business purposes. In order to create a business profile, you must also have a personal account—if you don’t already have one, it’s easy to start a personal account when setting up your business profile.
- Venmo business profiles work differently for sole proprietors and registered businesses.
- Business profiles offer users additional features such as formal tax documentation and added security.
What Is Venmo?
Venmo is a PayPal-owned payment platform that’s been around since 2009 and is currently only accessible within the United States. Venmo promotes itself as a social money transfer app that makes it easy to split costs and send and receive funds between people and businesses.
There is no charge when transferring funds from a bank account or your Venmo balance (business profiles, however, must pay seller transaction fees).
You must link your Venmo account to your U.S. bank account (or a debit card that permits Instant Transfer) if you want to send money between the two. Also, if you want to make payments larger than your Venmo balance amount, you’ll need to link a U.S. bank account, credit, or debit card.
When users send payments, they are given the option to write a note and accompany it with emojis or stickers. Depending on user preference—accounts can be set to private—the payment may show up in the feeds of others, who can then like or comment on the payment.
Can I Use Venmo for My Business?
Venmo isn’t just for peer-to-peer transactions anymore—the company now offers a Venmo business profile option for individuals, sole proprietors, and registered businesses to use.
As a sole proprietor, for instance, any payment methods you link to your Venmo account will be linked to both your personal Venmo profile and your business profile. However, if you set up your business profile as a registered business, Venmo will keep the payment methods separate for you. This means that any payment method you link to your business profile will only be linked to that profile and won’t impact your personal account, which in turn can help you better manage your finances.
A business profile allows customers to pay for goods or services through Venmo. The customer isn’t charged any additional cost, but the business must pay seller transaction fees that are comparable to industry standards. For every payment made above one dollar, the business must pay Venmo 1.9%+$0.10 of the amount.
Venmo can’t be used for business transactions unless the seller has an authorized business profile or the transaction is identified as being for goods and services.
Set Up Your Venmo Business Profile
In order to set up a business profile, you must be located in the U.S. and have a personal Venmo account. If you don’t already have a personal account, there’s an option to create one when opening your business profile.
You’ll use the details from your personal Venmo account to log in for both profiles, and will be able to switch back and forth between the two accounts by clicking on your picture in the upper-left corner.
If You Have a Personal Account
If you already have a personal Venmo account, open the app and click on your picture in the top-left corner, then select “Create a business profile.” You can also press on the three horizontal lines in the upper-right corner, select “Settings,” and then “Create Business Profile.” You will then be prompted to enter the necessary information for setting up a business account.
If You Don’t Have a Venmo Account
Start off by downloading the Venmo app. Once downloaded, select the “Business” option when prompted. Choose “Sign up” and then “Get Started”—you’ll be asked for your name and email, and will need to create a password for the account. You’ll need to enter your phone number and verify it with a code. After verifying your phone number, you’ll be asked for information about your business.
You’ll only be able to have one business profile per personal Venmo account.
Venmo Business Profile Features
Venmo offers some additional features to those with business profiles including:
- Formal tax documentation for businesses that meet or exceed the federal and state reporting threshold.
- Added security by verifying the identity of all business profiles that have a tax ID number.
- The option to accept Venmo at checkout in your app or mobile site and allow customers to add tips to their purchases.
- Options to provide potential customers with more information about your business in the app, including links to a website and social media accounts.
Personalize your business profile with images and text to take advantage of Venmo’s social setup and inform potential customers about your business.
Frequently Asked Questions (FAQs)
Is Venmo good for small businesses?
There’s no one-size-fits-all answer, it’s important to weigh the needs of your business with the needs of your customers. Consider if the benefits that Venmo provides are worth the price point.
What is the difference between Venmo personal accounts and business profiles?
Venmo personal accounts are meant to be used by individuals. Business transactions can’t be made on Venmo unless the seller has a business profile, or the transaction is flagged as being for goods and services. You must have a personal account in order to have a business profile (you can create one when you make your business profile).
How do I find my business account on Venmo?
If you’ve created a business profile, you can easily switch between that profile and your personal account in the app by clicking on your picture in the upper-left corner.