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Personal FinanceUpdated Jun 16, 2023
Expertise:Student loans, personal loans, home loans, insurance, credit cards
Jeff Gitlen, CEPF®, is the director of content operations at LendEDU. He graduated from the Alfred Lerner College of Business and Economics at the University of Delaware.
Learn more about Jeff Gitlen, CEPF®
If you’ve ever split a tab or the cost of an outing, you might be familiar with how difficult it can be to get everyone to contribute their fair share. In 2017, it’s easier than ever to make thesepayments using an applike Venmo. Founded in 2009 as a text to text mobile payment system, Venmo is a mobile payment system owned by Paypal that allows users to send payments to friends, family, and even vendors through a simple tap on the screen.
The way that Venmo works is simple. Users install the app on their phones and then link their bank account or credit card to the app. They can then send and receive payments to anyone who uses the app. In addition to sending and receiving money to friends and family, Venmo can be used to purchase goods and services through authorized merchants, including paying for takeout through apps that have partnered with Venmo.
When you initially sign up for Venmo you are limited to sending and receiving a total of $299.99 per week. Once you verify your identity by providing the last four digits of your Social Security number, your zip code, and your date of birth, you will be able to send and receive up to $2,999.99 per week.
Venmo Fees
Standard Venmo services are offered completely free of cost, which means that for the majority of users, Venmo is cost-free. Therefore, sending money to friends and family using a debit card or checking account is completely free of charge. However, Venmo does charge fees for processing transactions with a major credit card; a 3 percent processing fee is added to every transaction paid for using a credit card.
Over time this small service charge could add up, particularly for anyone who sendsmultiple payments a day. For example, if you ordered a pizza with your roommates and sent a Venmo payment of $10 to your roommate for your share, you would be charged 30 cents for sending that payment. 30 cents might not seem like a lot, but if you also sent multiple transactions for shared rounds of beer, movie tickets, or other expenses, these transaction fees could end up costing you a lot of money.
Avoiding Venmo Fees
It is possible to avoid Venmo fees entirely by understanding how and when Venmo charges fees. First, Venmo does not charge a fee for receiving money and making payments to authorized businesses. If you are buying a good or service with a business that has an option to pay through Venmo (and has been authorized by Venmo) then you won’t be charged a transaction fee to do so.
Second, Venmo does not charge fees for sending money if the money is coming from one of three places: your Venmo balance (the money that’s already in your Venmo account), your bank account, or your linked debit card.
If you are concerned about the security of linking your Venmo account with your bank account or debit card, there are ways to ensure the security of your account. For starters, Venmo provides safety and security features such as multi factor authentication and the ability to add a pin code.
However, there are other, round-about ways to ensure your bank account is not compromised. You could set up a bank account that is linked only to your Venmo account, helping you to avoid the fees charged by Venmo (just be sure that the bank does not charge fees!). Alternatively, you could purchase a prepaid debit card to link to your Venmo account. This will help you avoid Venmo fees while protecting the security of your bank account.
FAQs
Does Venmo have a transaction fee for instant transfers? Yes, the app charges 1.75% of the total amount for instant transaction services. In addition, standard electronic transfers of funds to your account are processed without fees. Use this method if you have the time to wait for your transaction to be processed.
How to calculate Venmo goods and services fee? ›
How much is the Venmo goods and services fee? The Venmo goods and services fee is 1.9% of the transaction amount, along with a fixed fee of $0.10 per transaction.
How to avoid Venmo fees? ›
While Venmo does charge some fees, it's fairly easy to avoid them. If you use your Venmo account to pay friends or businesses, you can avoid fees by only paying with your Venmo balance or connecting a bank account or debit card instead of a credit card.
What are the fees for Venmo business? ›
The bottom line: Venmo, a peer-to-peer money transfer app, is a low-cost option for businesses looking to accept contactless payments. Venmo business accounts charge a fee of 1.9% plus 10 cents per transaction. Unlike competitors like Zelle, Venmo doesn't offer free instant transfers.
Why is Venmo charging me a fee? ›
Payments that go through a credit card account rather than a linked bank account or the user's Venmo account incur a 3% fee. There are other miscellaneous fees for transferring money instantly from Venmo to a bank and for depositing checks.
Why is there a 3 fee on Venmo? ›
If you send money using a credit card, Venmo adds a three percent fee (which is the fee from the credit card company being passed on to you). You can avoid the three percent purchase fee by only sending money from your Venmo balance, bank account, or debit card.
What is considered goods or services on Venmo? ›
What is Goods & Services? Venmo allows the sale of merchandise and services by tagging a payment as a purchase. When tagged as a purchase, the Purchase Protection Program covers the payment, guaranteeing a refund in case of specific issues.
What is the downside to Venmo? ›
Potential scams and hackers.
The biggest downside to using Venmo is the potential for your money to be stolen. If a hacker gains access to your Venmo, it's pretty easy to change the associated bank account – so the hacker could change the account to their own and transfer the money in your Venmo to their bank.
What's the difference between regular Venmo and business Venmo? ›
A business profile is a way to accept payments for your business on Venmo. It's linked to your existing Venmo account so you don't need to open a second account, but is a completely different profile—so you can keep business and personal transactions separate.
What is the square fee? ›
The Square standard processing fee is 2.6% + 10¢ for contactless payments, swiped or inserted chip cards, and swiped magstripe cards. Payments that are manually keyed-in, processed using Card on File, or manually entered using Virtual Terminal have a 3.5% + 15¢ fee.
How much does it cost to send $1,000 on Venmo? If you are using a credit card to send $1,000, you will incur a 3% fee for the transaction amount. For $1,000 that would be $30. If you are sending the funds using your Venmo balance, bank account or debit card, there will be no fees.
Is there a max you can send on Venmo? ›
This makes Venmo an ideal platform for micro-transactions, whether splitting the bill at a restaurant or paying back a friend for coffee. The maximum amount that verified users can send per week is $60,000, but this is subject to limitations on how much you can send in a single transaction, which is $10,000.
Is Zelle safer than Venmo? ›
Some people prefer Zelle to Venmo; others love Venmo more. Both of the payment services are decently safe, have user-friendly interfaces, and allow you to conveniently send money when you need it.
Which is better, Square or Venmo? ›
Square Payments has 2319 reviews and a rating of 4.68 / 5 stars vs Venmo which has 9128 reviews and a rating of 4.73 / 5 stars. Compare the similarities and differences between software options with real user reviews focused on features, ease of use, customer service, and value for money.
