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How Does Venmo Make Money?

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How Does Venmo Make Money?

With the long list of free services Venmo offers, you might wonder how the company makes money. Some of its revenue comes from transactions with service fees. Sending money instantly costs users 1% or at least $0.25, for example. 

However, most of its revenue comes from business charges. When customers use Venmo to pay, Venmo charges the business a 2.9% fee. 

In essence, this is quite similar to charges businesses have to pay when customers use credit cards to make payments.

What is Venmo and How Does it Work?

Venmo is a mobile payment service launched in 2009 and acquired by PayPal, another payment service, in 2012. With this service, you can send and receive money without using actual cash. 

Sending Money

Venmo advertises being a social way to settle money owed to friends. Just to give an example, here are some ways Venmo can help you and your friends:

  • Covering half of the cab fare
  • Splitting a lunch check
  • Sending the rent money to your roommate

To send money using Venmo, simply open the Venmo app on your device. Then, tap on the Pay button, add your recipient, and enter the amount you’re sending. There’s a note field where you can include personalized messages to your recipient. 

Once you’re ready to send the money, just tap on the Pay button again. Note that you can add as many recipients as you want for a single transaction. 

Making Payments

Additionally, you can use Venmo to make online and in-store purchases through any of these:

  • Pay with Venmo Mastercard Debit Card in stores that accept Mastercard
  • Use Venmo as the payment method in supported online stores and Mobile apps
  • Pay by scanning a Venmo QR code in stores

Receiving Payments

As previously mentioned, you can also use Venmo to request payments. This works quite similarly with sending money. Only this time, you need to select “Request” instead of the “Pay” button.  

Money for Payments and the Venmo Balance

Now, you might wonder if you need to add money to your Venmo account to make payments and send money. You don’t have to, though. 

What you need to do is add a bank account or card. Venmo allows you to add the following cards as a payment method:

  • Credit
  • Debit
  • Prepaid
  • Network branded, such as Visa, Mastercard, American Express, and Discover

Once you add your bank account or card, that becomes your preferred payment method. Whenever you need to send money or make payments Venmo automatically charges it to that bank account or card. 

Besides your linked card or bank account, Venmo Balance is another fund source you can use. It is where the money you receive goes. And, there are two ways you can use the money in your Venmo Balance. 

  1. Suppose your Venmo is not yet verified and you don’t have access to Venmo Balance. In that case, you can only use the money on Venmo Balance by transferring it to your linked bank account first. 
  2. If you can access your Venmo Balance and it has sufficient funds, it will cover the entire payment. Otherwise, Venmo will charge the payment to your linked bank account or card. 

Pro Tip: Make sure to verify your account so you can start using Venmo Balance. Besides sending payments to friends, you can also use the fund here to pay in authorized stores, online shops, and mobile apps. 


Besides providing a convenient way to pay, receive, and send money, Venmo also offers the option to invest in cryptocurrencies. 

Some of the coins you can buy, sell, and hold in Venmo include:

  • Bitcoin
  • Ethereum
  • Bitcoin Cash
  • Litecoin

To transact with cryptocurrencies in Venmo, you need to have a verified account first. Additionally, you can only hold the cryptocurrencies on your Venmo account and not transfer them to other crypto wallets. 

Venmo Fees

Venmo advertises zero fees when it comes to creating and holding an account with them. Besides that, Venmo doesn’t charge additional fees for these transactions:

  • Paying for online purchases
  • Sending money using Venmo Balance, bank account, or debit card
  • Transferring money from your bank account
  • Receiving money from other Venmo users and direct deposits
  • Refunds from merchants
  • Standard electronic withdrawals
  • Customer service, automated or with a live agent
  • Account statements
  • Declined transactions due to insufficient funds

Other transactions, though, include additional charges. For example, sending money to people using your linked credit card incur a 3% service fee. Meanwhile, buying and selling cryptocurrencies cost at least $0.50 per transaction.

How to Sign Up to Venmo?

Before signing up for Venmo, note that its service is only available in the US. Also, you can only link US-based bank accounts and phone numbers. With that said, here are the steps to sign up:

Step 1: Choose a Platform

Venmo allows you to create an account either through its app or website. You can get the mobile from the Apple App Store if you’re using an iOS device. For Android device users, the app is available in the Google Play Store. 

If you prefer to use a computer, you can sign up through Venmo’s website. Both of these options require the same set of steps and information. Also, you can sign in to your account on any device regardless of where you originally created it. 

Step 2: Select a Sign-Up Method

In this step, you’ll need to select which type of Venmo account you want to create. There are two options: Personal and Business. The Personal account works if you’re mainly looking to use Venmo to pay and accept money from friends and businesses. 

On the other hand, the Business account lets you accept and manage payments. It also allows your business to join the Venmo community. Plus, by creating a business account, you’ll also receive a personal Venmo account. 

Step 3: Enter Login Details and Verify Your Identity

After selecting your signup method, you’ll need to select a password that has eight to 32 characters. If you’re signing up through the website, you’ll need to provide your phone number first. 

Venmo will send you a verification code, which you need to enter on the website or mobile app. This confirms that it’s you who’s actually requesting the account creation. 

With a verified phone number, you can also use the following services:

  • Transfer funds to your bank account
  • Send and request money
  • Make payments 

After verifying your phone number, you can provide an email address to verify it as well. For this, you will receive a verification link on your email account. You only have to click that to verify your account. 

At this point, you have essentially created your Venmo account. To start using it, you need to have a linked bank account or card. Through a computer, go to the Venmo website and log in to your account. 

You can navigate to the “You” tab by clicking the single person icon. From there, go to the Settings icon and choose “Payment Methods.” You’ll see there the option to add a bank or card. 

Venmo Alternatives

Venmo is undoubtedly among the most popular payment services these days. Still, you might be looking for other features that its alternatives may offer. Here are other platforms you can check out. 

Venmo vs. PayPal

Although PayPal is technically Venmo’s parent company, it’s also a popular payment service by itself. Both platforms offer free apps that you can download through the Apple App Store or Google Play Store. They also have accessible websites. 

Additionally, you can use most of their services for free. These include sending and receiving money and making payments to authorized stores.  

Still, there are notable differences these two platforms have. For example, Venmo payments can only be used through its app. PayPal payments, on the other hand, works with either the mobile app or web version. 

Additionally, Venmo and Paypal differ in their service reach. Venmo is exclusively for customers located in the US. On the contrary, customers in selected countries besides the US can sign up and use PayPal.

free paypal money

Venmo vs. Cash App

Cash App Summary

  • Instantly send and receive funds
  • Option to buy and sell bitcoin
  • You can invest in ETFs and stocks
  • Most transfers have no processing fees



Another payment service app you can check out is Cash App. The process to send and receive money using this platform is quite similar to Venmo. 

Even the fees have some similarities. For example, Cash App also charges 3% when you use a credit card to send money. Instant transfers to your bank account, meanwhile, charge a 1% service fee.

Both platforms offer excellent ways to settle payments and receive funds. However, you’ll find that Venmo can help you further with your money. After all, you have the option to save some of it through cryptocurrency investing at Venmo. 

Venmo vs. Zelle

When it comes to sending and receiving money, Zelle is another excellent option. Like Venmo, it doesn’t charge any fees for these transactions. You can also sign up and use its app for free.

However, Zelle offers limited services compared to Venmo. Person-to-person payment is about the extent of its features. Unlike Venmo, you can’t use this to pay for your purchases. Also, you can only link a bank account to fund your account.

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Kate Starr


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