Most adults know that money is never free, not even on an app that appears to be free, or at least “free of fees”. While fees can be lower, they are usually not completely zero – not even on the popular peer to peer payment app, Venmo.
Today we are sharing that Venmo just announced its change in fees, after continuing to develop their fee-associated professional offering for businesses in addition to a new consumer credit card.
Personal Venmo Account Fee Increases
As of later this spring, fees to instantly transfer money in your personal account will go from 1% to 1.75% with a minimum transfer fee of $0.25 and a maximum of $25.00 – of course if you can wait 2 to 3 days, there is no fee assessed (just like before.)
In addition, the costs for credit card transfers appear to be staying the same at 3% for bringing funds into your account from a consumer credit card.
Be sure to read the new Terms and Conditions on your account if you have one.
Peer to Peer Payments Growing in Popularity
When Venmo started gaining popularity a few years ago it was touted as a peer to peer payment network. It was an innovative, new way to easily share the high speed internet bill with your apartment mates, or split the cost for dinner without asking the server to run more than one credit card.
It was easy, fun (you could add emojis) and start using the app pretty quickly. Parents could send money to teens or college aged children and fund day-to-day expenses without needing their offspring to wait days for money. But, there was a limit (currently this is capped at $300 per week – that is the most that can be transferred), and there were some risks:
- Not FDIC insured;
- The transfers, by default were (actually still are) public; and
- Like anything growing in popularity, became susceptible to scammers.
Is Venmo More Expensive for Commercial Transactions?
Initially, no. Some businesses started using the “free” account, which was really a work-around to traditional merchant services. It appeared too good to be true. And, it was.
Venmo (backed by PayPal) got wise to that pretty quickly and instituted fees for commercial accounts.
While for some businesses, the fee structure might be surface-level comparable, it can become more expensive due to the length of time until funding is completed vs. a traditional merchant services account.
In addition, there are limits imposed on new (unsecured) accounts, of just under $5,000 per week, with a cap on deposits of $999.99 per week. (If the account is verified, the limits are higher, but these will be too low for some businesses.)
The Bottom Line
Keeping your bottom line in mind is something we do every day. Since we don’t require our clients to have a contract, we are constantly looking for ways to help improve your profitability.
Our guidance with this news is to be aware of what you need for your business, don’t be swayed by what seems “too good to be true”. Fully understand the accessibility of your funding from the payments you have received and the apps you are using.
It is wise to have a variety of payment options for your business, which can be handled with software or hardware, that do not add to your overhead, or increase your time to get paid.
Learn more about the latest digital payment suite, including Text2Pay and other low-fee transaction options through TransAct. Book a one-on-one 20-minute call to review your business needs and options available.