What Are Venmo Fees?

What Are Venmo Fees, July 2021

Don’t know about the Venmo fees? Contrary to popular belief, the company does charge its users when they make specific transactions. In this post, I will explain everything you need to know about Venmo fees.

Venmo is one of the most used peer-to-peer (P2P) payment apps out there. It works on both Apple’s iPhones and Android phones and enables easy transfer of funds.

However, it’s easy to be led to believe that the company does not charge fees when you make a transaction. There are, in fact, fees charged for every transaction you make.

But then how come you don’t see any transfer fees? And why do transfer fees apply if you transfer money to another account via your credit card?

In this post, I will explain everything you need to know about the Venmo fees.

But first, let me give you a brief look into Venmo’s history.

How Venmo Became So Popular

The company was founded in 2009, well over a decade ago. But the app wasn’t the same Venmo app we know today – it started as a message-based payment transfer system.

Later in 2012, the company introduced a new platform to its customers, which had an integrated social network. It didn’t take long for the platform to become popular.

Braintree acquired the company a few months after the introduction of the new platform, and less than a year later, Braintree was acquired by PayPal Holdings Inc.

This move led to an exponential growth in Venmo’s user base. 

Venmo not only made sending and receiving money convenient, but it was also acquired by the right company at the right time – which led to it become one of the biggest payment apps now available.

How Does Venmo Work?

First, you must install the application on your phone and create a Venmo account.

After signing up, you must link the account to your checking account or add your debit or credit card to it.

And that’s it – you can then send funds to or receive funds from other Venmo users.

The other users also have their bank account or a card linked to their account, and the funds you send ultimately land up in their bank account.

In other words, the application acts as an intermediary connecting the two accounts.

The balance you see on the app is basically a virtual ledger. It only represents the funds that are traded back and forth – it doesn’t actually execute the transaction outside of the platform.

Until the balance is transferred to the bank account, the money isn’t technically in the user’s possession.

What Are Venmo Fees?

When you send money to another user via Venmo, a 3% fee is triggered. However, the company waives this fee if you use your Venmo balance, a debit card, or a bank account to make the payment.

However, if you use a credit card to make the payment, Venmo transfers the 3% charge that originates from the credit card company to you.

Therefore, if you decide to use your credit card with Venmo, you will need to pay a 3% fee for every transaction you make.

Is Venmo Safe To Use?

Venmo uses encryption technology to protect users from getting hacked. The servers are stored in secure locations, which ensures that your data also physically protected.

In addition to all this, Venmo users can set a PIN code, without which the mobile app does not work.

However, it’s important to understand that every internet-connect application is vulnerable to security breaches.

Considering that your banking information is present on your Venmo account, you must take steps to protect your account. Here are some precautions that will help:

  • Avoid transferring large amounts to your Venmo and forgetting to use it.
  • When money is transferred to your account, wire it back to your linked bank account as soon as possible.
  • Avoid sending money to strangers – only transact with the people you know.
  • Get yourself off the Venmo social network. All you need to do is change your privacy settings to “Private.” This will ensure that no one can see your transaction history.

How Does The Company Make Money?

The fees Venmo charges you when you use your credit card is only one of the different ways the company makes its revenue. 

Since Venmo works on PayPal’s infrastructure, the platform works perfectly with over two million merchants.

Most of the company’s revenue comes from per-transaction fees that merchants pay.

But the company derives its revenue in two distinct ways:

Smart Payment Buttons

The company makes its revenue through “smart payment buttons” that are integrated into other apps.

For instance, in 2018, Uber added an option allowing customers to pay for their rides, and also their Uber Eats orders using Venmo.

The convenience of not needing to leave the app alone makes Venmo the go-to payment option for many.

But additionally, the company also enables users to split the bill, which makes it even more of an enticing payment option.

Venmo Debit Card

Another source of the company’s revenue is the Venmo debit card. The card is built to draw funds directly from the user’s Venmo balance.

Since Venmo debit cards are on the Mastercard network, the card can be used to make a purchase at any business that accepts it.

Enabling users to use their Venmo balance via a card to pay businesses directly led to Venmo expanding beyond the reach of any other P2P platform.

The merchants who accept the card or integrate the smart payments button are charged a 2.9% fee per transaction, plus $0.30.

And with that, you know everything you need to know about Venmo fees!

As long as you don’t use a credit card to send people money, you won’t need to pay any fees. You can enjoy the convenience of transferring and receiving money in seconds for free.

Just remember to stay safe when you use the app – the precautions above will go a long way in protecting you when you transact using Venmo.

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