Do you know about Venmo fees? Contrary to people’s beliefs, the company charges when the company is used by certain users. This post explains everything you need to know about Venmo charges.
Venmo is one of the most used peer-to-peer (P2P) Payment apps. It works well on both Apple’s iPhone and Android phones and enables easy transfer of funds.
It’s easy to believe that the company doesn’t charge a fee when you make a transaction. In fact, there is an actual charge for each transaction you make.
Then, how you can not see any transfer fees? And if you transfer money to another account with your credit card, why the transfer fee apply?
This post explains everything you need to know about Venmo fees. But first a brief history of Venmo is given. Let’s Check it out.
How Venmo Became So Popular
The Venmo company was founded a decade ago in 2009. But you didn’t know the app that you use now, it just started as a message-based payment transfer system at that time.
Then in 2012, the company introduced a new platform to customers, which had an integrated social network and it did not take long for the platform to become popular.
Braintree took over the company within months of the new platform being launched, and less than a year later, Braintree was acquired by PayPal Holdings. This move led to a closer increase in Venmo’s user base.
Venmo not only made it easy to send and receive money, but the right company bought it at the right time and that’s the point, which makes it one of the largest payment apps now available.
How Does Venmo Work?
If you do not have a Venmo account, you must first install the application on your phone and create a Venmo account.
After signing up for an account you need to link your account to the checking account or add your debit or credit card.
Then you can send or receive funds from other Venmo users.
Other users also have a bank account or a card linked to their account, the funds you send are eventually credited to their bank account. In other words, the application acts as a mediator between the two accounts.
The balance you see on the app is basically a virtual account. It only represents the funds that are traded next. They do not actually execute transactions outside the platform.
The money is not technically in the user’s possession until the balance is credited to the bank account.
What Are Venmo Fees?
The 3% charge starts when you send money to another user via Venmo. The company provides free of charge if you use your Venmo balance, debit card, or bank account to make the payment.
If you use a credit card to pay, Venmo transfers the 3% charge from the credit card company to you.
If you decide to use your credit card with Venmo, you will be charged 3% for each transaction you make.
Is Venmo Safe To Use?
Venmo uses encryption technology to protect you from hacking. These servers are stored in a secure place where your data is also physically protected.
Plus the mobile app doesn’t work where Venmo users can set the pin code. This makes every Internet-connected application vulnerable to security breaches.
You have provided your banking information on the Venmo account which steps must be taken to protect your account. Here are some tips that will help:
- Don’t forget to transfer a large amount to your Venmo and use it.
- Once the money has been transferred to your account, wire it back to the bank account with your link as soon as possible.
- Avoid sending money to strangers. Only make a transaction with people you know.
- Get yourself off the Venmo social network. You need to change your privacy settings to “Private”. No one can see your transaction list. To see more about how to use Venmo click here.
How Does The Company Make Money?
When you use your credit card, Venmo charges you a fee which helps the company increase its revenue.
Since Venmo works on PayPal’s infrastructure, the platform works perfectly with nearly two million merchants.
Many company’s revenues come from per-transaction fees paid by merchants. But the company got its revenue in two different methods:
Smart Payment Buttons
The company earns its revenue through a “smart payment button” that is integrated into other apps. For example, In 2018, Uber added an option that allowed customers to pay for their rides and also added their Uber Eats orders using Venmo.
With the convenience of the app, Venmo will have the option to pay for more people. But in addition, the company enables users to split bills, making it more of an attractive payment option. Click here to see the difference between Venmo vs Cash App.
Venmo Debit Card
A Venmo debit card is another source of the company’s revenue. It is specially designed to withdraw funds directly from the user’s Venmo balance.
Venmo debit cards are on the Mastercard network so that it can be used to make a purchase at any business that accepts them.
Merchants who accept cards or are able to integrate a smart payment button are charged 2.9% per transaction, plus $0.30.
Now, you know everything about Venmo fees. If you do not use a credit card to make a transaction until then you don’t need to pay any fees. You can enjoy the facility of transferring and receiving the money in a few seconds for free.
Always keep your safe side while using the app. The above precautions will always help yourself to protect you when you transact using Venmo.