How Venmo Makes Money
Venmo derives a significant pot of revenue from the per-transaction fees it charges merchants. Thanks to PayPals infrastructure, Venmo is compatible with at least 2 million merchants, consequently enabling Venmo to rake in two discrete types of income streams.
The first type of revenue is facilitated through a “smart payment button” that can integrate into other apps for in-app purchases. For example, in 2018, Uber added a service that allows its app users to pay for rides and Uber Eats using Venmo, without ever leaving the Uber app. Furthermore, the cost of rides and food items can be divided among multiple users via the Uber app.
The second source of merchant revenue is derived from the Venmo debit card, which draws directly from a users Venmo balance. This card operates through Mastercard and can be used at any business that accepts Mastercard. This function has helped Venmo expand beyond its exclusive P2P platform, empowering customers to transact directly with online retailers and brick-and-mortar establishments.
In both revenue-generating scenarios, Venmo charges merchants a 1.9% fee, plus 10 cents per transaction. Companies are willing to pay these rates due to the wealth of new customers Venmo brings to their doors. Furthermore, Venmo users are more likely to elevate the profiles of participating companies over their social media accounts.
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, PayPals 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.
How Plaid Secures Your Info
With Plaid, you can control every single detail of your personal information. You decide what Plaid will give to applications including:
- Balances
- Investment holdings
Also, Plaids privacy policy states that they will not sell or share your personal information. They only use it to provide you with the service you requested.
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Do I Need To Add Money To My Venmo Balance To Make Transfers
No, it’s not necessary to add funds to your balance to make a payment. Each Venmo account is linked to the user’s bank account to facilitate simple transfers between the two. This basically means that if you want to send money via Venmo but don’t have the necessary funds stored there, the total required amount will be taken from your bank account instead.
Linking Directly To Your Account
To link directly to your Chime Bank account and use it with Venmo, click on Bank. Then choose from Instant Verification or Manual Verification.
For most people, using instant verification is your best option as your account is verified instantly and only requires you to sign in to your Chime account. However, if you prefer you can use manual verification. You need your Chime Bank account number and it can take up to 3 days to verify.
For the remainder of this guide, we are going to assume you clicked on Instant Verification. This process is handled through a service called Plaid. You will be prompted with a few disclaimers to which you will click on Continue. Next, you will need to select your bank. Select Chime and then login into your Chime account with your email address and password.
Recommended Reading: As a Chime user, have you ever considered using something in addtion to or even as an alternative to Venmo? I wrote an article showing how you can connect your Chime account with Cash App as well as how you can use Chime with Zelle. Both great options!
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Is It Safe To Link My Bank Account To Venmo
Should I connect my bank account to Venmo?
To avoid any overdraft or other bank fees make sure you have at least $2 in your bank account. Once you add a bank account, we strongly recommend that you verify it before transferring funds or sending a payment. Venmo is not responsible for lost bank transfers as a result of incorrect bank credentials.
Is it better to link bank account or debit card to Venmo?
Link Credit Cards, Not Debit Cards
Venmo allows you to link both credit and debit cards to your account to use as payment methods. In terms of security, you’re better off using a credit card in place of debit, as credit cards have more legal protections governing fraud compared to debit cards.
Is Venmo a security risk?
Venmo is generally safe if you take certain precautions. Because it uses encryption to protect your personal information, Venmo can be safely used to send money to people you trust. However, your Venmo account could be vulnerable if you lose your phone, share your password or fall victim to a scam.
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Using A Debit Card Or Credit Card
To use a debit card or credit card with your Venmo account including a Chime debit card, . You will then be prompted to enter your card number, expiration date, security code, and associated zip code. Once youve entered the requested info, to finish adding the card.
After your card has been added, Venmo will attempt to verify the account by making a small transfer of $1. It is important to ensure you have money in your Chime account, otherwise, you may incur an overdraft charge.
How Do I Transfer Money From Venmo To Paypal
1. Open the Venmo app. 2. Go to the You tab and tap Transfer balance.
3. Enter the amount of money you want to transfer, then choose Instant or 1-3 business days. Instant transactions will be charged a 1.5% fee.
4. Select your bank account, then tap the green Transfer button.
5. Log in to PayPal.
6. Click the Wallet tab, then Transfer Money.
7. Click add money to your balance.
8. Select your bank account, enter the amount of money you want to transfer, then click Add.
Quick tip: You can also transfer money from your bank account to PayPal on the iOS or Android app. It typically takes three to five business days for transfers to go through.
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Can I Have A Second Venmo Account For My Business
If you want to set up a Venmo for business account, youll need to also open or link an existing Venmo personal account.
If you already have a Venmo personal account, and youre eligible for a Venmo business account, youll be able to automatically link the 2 and then toggle between them. Alternatively you can sign up to both a personal and business Venmo account at the same time.
How To Connect Your Bank Account To Venmo
Your Venmo account is set up now, but there is still one more thing you need to get out of the way: linking a bank account. If you have a bank account, you will have to link it to your Venmo account so you can receive payments. Luckily, it is not that difficult, and it can be done in minutes as long as you dont have to open a bank account as well.
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How To Protect Yourself
Users can take the following precautionary measures to combat hacking:
- Never store large amounts of money in Venmo balance.
- Immediately transfer Venmo transactions to linked bank accounts.
- Only use Venmo to exchange funds with familiar people.
- Change the setting to private in order to cloak transaction histories. Otherwise, other people, including strangers, will be able to view details of your transactions by clicking on your profile.
In 2021, Venmo ditched its controversial global feed, which publically listed all transactions made by users who failed to change their default settings to private.
How To Set Up A Venmo Account
1. Download and open the Venmo app on your iPhone or Android.
2. You will see two options at the bottom, “Sign up with Facebook” or “Sign up with email.” Choose one.
3. If you select Facebook, the app does the work for you, and you only need to click continue and give the app the proper permissions. If you select email, you will be prompted to enter your first and last name, email, and password. Fill in the information.
4. Venmo will now give you information about how it works. Scroll down and read as much as you feel you need to, then, when you’re done, tap “Next” at the bottom.
5. Read the User Agreement and Privacy Policy to your satisfaction, then tap “Next” in the upper right-hand corner of the screen.
6. You will be prompted to enter your phone number so that Venmo can send you a confirmation code.
7. A four digit confirmation code will be sent to your phone via text. Enter it into the box, then hit “Submit Code.”
You can also add a photo or change your automatically generated username if you’d like, or do this later.
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Venmo Vs Paypal: Requesting Money
Its 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 , 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 youre in a rush, Venmo allows you to choose an instant transfer for a small fee.
Use Venmo Balance Instead Of Bank Account Summary
To use your Venmo balance instead of a bank account, you must first verify your account. After that, you can use your Venmo balance to make Venmo payments and transactions. You can also transfer your funds to Apple Pay and PayPal, provided you have the same linked bank account.
See our guide on using Venmo at Walmart in-store and Target online.
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Are Money Transfer Apps Safe
Money apps are arguably safer than cash since most require you to create an account with a password and two-factor login methods to verify your identity and the person you are sending money to.
Likewise, using a money app is safer than writing a check because it will not expose your bank account number and routing number to the person who receives it. By signing up for a money transfer app, you are, in essence, making it possible for anyone to send you a digital payment without viewing any of your secure account information, just your user ID or email address/phone number. And unlike cash, digital payments cannot be lost.
Because digital money apps allow you to send money to anyone with an account, the one caveat is that it can be easy to send money to the wrong person if you’re not careful. Some apps offer additional protections, like QR-code scanning, text or email verification, unique user IDs and profile pictures to ensure the right person is on the receiving end of your payment.
Why Cant I Send Money From My Venmo Balance
Even though you have a Venmo account, you may wonder why you cant send money from your balance.
Here are the following reasons you cant send money from your Venmo balance:
- If you have access to Venmo balance: You probably spent some funds to make a payment. However, some of the money may have been used to cover a negative balance on your Venmo account.
- If you dont have access to Venmo balance: Your Venmo account has not yet been verified. Venmo payments can still be received and transferred to a bank account, but the balance in your Venmo account cannot be used to make Venmo payments until verification has been completed. So, your Venmo payment will show on your bank statement and not from your balance.
For inquiries, you can contact Venmo customer support via the mobile app or call 812-4430.
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How To Link Your Found Account To Venmo
Youâre able to link your Found account to your Venmo account, and then transfer funds between those two accounts. Venmo allows for you to link your account by either selecting âCardâ or âBankâ, below are instructions regarding both options:
Selecting âBankâoffers instant verification for Found app users through Plaid
Using the âBankâ method:
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In your Venmo app, click the icon at the top right of the screen
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Select âSettingsâ
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Once in âSettingsâ click on âPayment Methodsâ
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Next, you will be asked to âAdd a bank or cardâ
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Select âInstant Verificationâ, select to âContinueâ
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Next, you will be asked to enter your Found Login credentials
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âUsernameâ this is the email address associated with your Found account
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âPasswordâ this is your Found account password
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Next, you will see a screen with the last 4 digits of your Found account, select âContinueâ
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Now your Venmo will show âRadius Bankâ as a linked account
Using the âCardâ method:
Youâre also able to link your Found card to Venmo, to add card details instead, simply select âadd cardâ in the âPayments Methodâ section of your Venmo account.
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In your Venmo app, click the icon at the top right of the screen
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Select âSettingsâ
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Once in âSettingsâ click on âPayment Methodsâ
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Next, you will be asked to âAdd a bank or cardâ
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Select âCardâ
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You will be prompted to enter your card details
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 doesnt surface the contact youre 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 youd 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 users PayPal or Venmo balance within a couple of minutes, often even seconds. With both apps, youll want to make doubly sure youre sending money to the right contact, since the companies wont refund your money if you send it to the wrong person.
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