Venmo for Business: An Honest Guide to Venmo for Merchants
Venmo took the world of peer-to-peer transactions by storm. Now it’s starting to look like Venmo for business is the next big thing for SMBs. Digital wallets are booming in light of the coronavirus outbreak, but Venmo, in particular, has risen to the top. Statista reports that Venmo’s net payment volume was a whopping $37 billion in the second quarter of 2020. That’s a 52% jump from last year’s numbers.
The pandemic definitely accelerated the rate of Venmo adoption for SMBs. The truth is that digital wallets aren’t just convenient––they’re the way of the future. And business owners that dipped their toes into the digital wallet pond with Venmo aren’t going to go back to exclusively cash and card transactions anytime soon.
The convenience and low cost of digital wallets may have you thinking about setting up Venmo for your business. But the truth is that Venmo transactions aren’t right for every company. In fact, not all Venmo business transactions are…how you say… legal.
There are a few factors that need to be considered when assessing if and how to use Venmo for your small business including how it works, how much it costs, and when it is (or isn’t) advisable (or legal) to use Venmo for your SMB.
But first, let’s take a look at what Venmo actually is.
What is Venmo?
Venmo is one of the three most popular peer-to-peer payment platforms in the U.S. It opened up for selective business use in 2016 and has been expanding its business applications since then. Since Venmo cut its teeth on P2P transactions, it can feel more personal than requesting that customers use a more traditional payment method. It’s also convenient: more than 60 million people already have Venmo.
Little known fact? Venmo is owned by PayPal. Venmo’s parent company recently announced that it’s going to be accepted just about everywhere that accepts PayPal. However, merchants still have to route Venmo payments through a third party. Thus far, Braintree or PayPal are the only two platforms that you can use for Venmo business transactions.
Can You Use Venmo for Business?
If you’re wondering if you can use Venmo for business, the answer depends on what type of business you run. First of all, your business has to be based in the U.S. to accept Venmo payments. It doesn’t work on international accounts. Venmo also can’t be used to accept business payments without creating a business account through a native app or through PayPal. Some SMB owners process in-person transactions without creating a business account to avoid the processing fee. This isn’t cool, since it deprives Venmo of the transaction processing fee from the purchases.
How Does Venmo for Business Work?
Merchants can start accepting Venmo payments by creating a business profile on the platform. If you don’t have an account yet, just sign up for one using the Venmo app. If you already have a Venmo account, you won’t need to create a new account. Your business profile can live alongside your personal one, but business and personal transactions will be kept separate.
Once you have your business account, you’ll be able to add a profile picture and background image. Your profile will also be highlighted in Venmo users’ feeds, which helps drive awareness for your business. You could also obtain a free QR kit that contains stickers, wallet cards, and a tabletop display containing a QR code to make it easy for customers to pay you via Venmo.
Remember, Venmo is a public payment platform. Unless a payment is marked as “private” on Venmo, your customer’s friends in the app will be able to see that they made a purchase at your store. This can be great for SMBs looking to attract new customers. Not so great if you sell products your customers don’t want to make a public announcement about purchasing, such as weight loss supplements, personal care items, etc.
But this is also a benefit to using Venmo for business: the potential it offers to continue your in-person interaction. It’s a fantastic way to facilitate one-on-one engagement with customers post-purchase, without the challenge of trying to get them to sign up for an email list. You can use the app to “like” customer purchases, ask them if they have any questions, or thank them for coming to your store.
Still want to know how to set up Venmo for your business? Here’s Venmo’s official link, which gives you the option to setting up an account using either Braintree or PayPal.
Venmo for Business Fees: How Much Does it Cost to Take Venmo Payments?
Everything comes with a price, doesn’t it? Venmo fees for businesses are pretty transparent. Venmo charges 1.9% + $0.10 for every payment that’s $1 or more.
This means that if a customer pays for a $100 product or service via Venmo, you’ll receive $98 after payment processing fees. Do note that these fees are non-refundable.
When Does it Make Sense to Take Venmo Payments?
Venmo for business is great for SMBs that are just getting started and don’t want to spring for a POS system, or for ecommerce businesses that are large enough to renegotiate their payment processing fees. If you’re deciding between running your business’s Venmo payments through PayPal or Braintree, keep in mind that Braintree—although bigger—is lesser known.
PayPal, on the other hand, is a third-party payment processor that can freeze your account without prior notice. PayPal also doesn’t give you the option to offer Venmo as a free-standing solution for business transaction, but Braintree does.
When Does it NOT Make Sense to Take Venmo Payments?
Simply put, if your customers aren’t using Venmo, then it makes little sense to use the app as a payment method. That said, could always consider testing the app to see how shoppers respond. You could also use it to supplement your existing payment solutions.
We realize that, as a merchant, you’re constantly looking for ways to save money on transaction processing. Venmo for business can help you do that, so it’s worth it to stay educated about the platform’s options for SMBs as they’re rolled out. However, credit card transactions now make up 82.1% of all retail sales in the U.S. They’re still the bread and butter of most retail businesses, which means it’s important to save on credit card transactions where you can.
Payment Depot gives merchants like you wholesale rates on credit card processing––this means a clear fee structure… and no surprises on your monthly bill. PD’s membership pricing model saves merchants an average of $400 a month on credit card processing. So, while you’re keeping an eye on Venmo’s burgeoning offerings for SMBs, check out Payment Depot’s fee structure to see how you can make an immediate, tangible positive impact on your next credit card processing statement.