P2P (Peer to Peer) payment platforms, also known as P2P money transfer apps, allow users to easily send and receive money from their mobile devices using linked debit cards, credit cards, or bank accounts. These platforms also offer the convenience of splitting bills among friends and family. Popular examples include Venmo, Zelle, Cash, Paypal, and Google Pay.
Venmo is a user-friendly P2P mobile payments app available for both iOS and Android users. It enables users to transfer money to each other through the app’s partner company. Users can also make payments to select merchants using Venmo’s debit card or pay with Venmo features. The app allows users to request money from others or send money without being prompted.
What Is Venmo?
Venmo, founded in 2009, initially operated as a text-based payment delivery system. However, in 2012, the company transformed its platform by integrating it with social networks to tap into the growing peer-to-peer economy.
Within a short period, Venmo gained significant attraction and caught the attention of Braintree, a mobile payment system utilized by popular eCommerce brands like Uber and Airbnb. Braintree acquired Venmo for $26.2 million.
Subsequently, PayPal Holdings Inc. acquired Braintree for $800 million, resulting in a substantial increase in Venmo’s user base and monetization potential.
One distinctive feature of Venmo is its public feed of transactions, resembling a social media feed. Users can comment on and like these transactions, often expressing the purpose of the transaction through the use of emojis.
While Venmo emphasizes personal privacy, users can make their transactions private if desired. Adding a note to the transaction is still mandatory, ensuring transparency. Furthermore, Venmo expanded its services to the web, allowing users to make payments through the platform’s website, a feature announced in 2018.
How Does Venmo Work?
Venmo offers free transactions when using a bank account, debit card, or Venmo balance. However, a standard 3% fee is applicable for transactions made with a credit card.
Users are not required to add funds to their Venmo wallet separately. Whenever someone makes a payment, the funds are automatically available in the Venmo wallet. Users can then withdraw the money to their linked bank account, and it will typically appear in their account on the next business day.
Venmo provides easy accessibility for transactions with both contacts and businesses. The platform ensures the security of transactions and app data through encryption.
Funds received through the Venmo app can be used for future transactions, providing users with the ability to conveniently manage their money.
Learn How to Use Venmo for Sending or Receiving Money!
Using Venmo to send or receive money is a straightforward process. Here are the steps:
To send money
- Open the Venmo app and tap on the circular icon located at the bottom right corner.
- Select the person or contact to whom you want to send money.
- Enter the desired amount and indicate whether you are paying or requesting money.
- Above the payment tab, there is an option to specify who can see the transaction details.
- Choose between private, public, or friends. Opting for private will hide the transaction from the public timeline.
- Alternatively, the transaction description will be set to public by default.
To receive money
- Inform the person who owes you money to open the Venmo app.
- They should tap on the circular icon at the bottom right corner.
- In the “Search People” field, they can type your name or username to find you.
- They can then enter the amount owed and select the option to pay you.
- Similar to sending money, they can choose the visibility of the transaction details.
By following these steps, you can easily use Venmo to send or receive money with just a few taps on the app.
How Does Venmo Make Money?
Venmo generates revenue through various channels. Here is a breakdown of how Venmo makes money:
Venmo offers users the option to instantly transfer their Venmo balance to their bank account, bypassing the typical 1 to 3-day waiting period. For this service, Venmo charges a 1% fee per transaction, with a minimum of $0.25 and a maximum of $10.
Cash a Check
Venmo introduced a cashing service in January 2021. Users can cash physical checks through the app, and Venmo charges a 1% transaction fee with a minimum check amount of $5.
Pay with Venmo and Venmo Debit Card
Venmo’s primary revenue stream comes from payment processing. When users make payments using Venmo or the Venmo debit card, the platform charges a transaction fee of $0.30, along with a 2.9% merchant fee. This fee structure is similar to traditional payment card networks like Visa or MasterCard. Venmo payments are accepted at point-of-sale (POS) counters that accept MasterCard.
Interchange and Withdrawal Fees
Venmo charges merchants interchange fees for processing their transactions. Additionally, when users withdraw funds from their Venmo balance at ATMs, they are subject to a $2.50 fee. Withdrawing funds from bank tellers incurs a $3.00 fee.
Cash Interest from Loans
Venmo lends cash from its system to banks, earning interest in return. In 2019, the average lending fee was 3.35%.
Venmo offers a cashback reward feature with their Venmo debit card, similar to other debit cards. Users can earn cashback rewards ranging from 1% to 2% of the transaction value. Partner merchants participating in the cashback program include Chevron, Papa John’s, Target, Dunkin’ Donuts, and more.
These revenue streams allow Venmo to generate income while providing convenient payment services to its users.
Amazing Statistics Of Venmo
Here are some key statistics related to Venmo
- Over 7 million Venmo users fall within the 18-30 years age group.
- In 2019, Venmo had more than 50 million active accounts.
- Approximately 14% of adult Americans use Venmo for peer-to-peer transactions.
- Venmo processed approximately $160 billion in total payments in 2020.
- Around 30% of small businesses have not yet heard about Venmo.
- The average amount transferred on Venmo is $60.
- 60% of Venmo customers are male.
- Emojis play a unique and essential role in the Venmo payment service experience.
What Are The Top Competitors & Alternative Of Venmo?
Here are the top competitors and alternatives to Venmo:
Zelle is a peer-to-peer service offered by many U.S. banks, allowing users to transfer payments to other Zelle users through their bank accounts or the Zelle app. It offers instant money transfers and is integrated with numerous credit unions and banks. However, it has limitations such as the inability to add a credit card, requiring a smartphone to function, and the inability to transfer money to international bank accounts.
Created by Square Inc., Cash App enables users to send and receive money using linked debit cards, credit cards, bank accounts, and Cash App balances. It also offers a debit card called Cash Card, providing additional features like “Cash Boosts” for savings at select merchants. Cash App allows users to invest in stocks and buy/sell bitcoins. However, it charges fees for sending money with credit cards and instant deposits.
In the realm of peer-to-peer payment apps, Venmo stands out as a popular and user-friendly choice. With its robust revenue model and continuous growth, it offers a range of features that make money transfers and bill splitting effortless for its users. If you have any further inquiries or concerns, please don’t hesitate to reach out to us. We’re here to assist you!
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