Venmo for Business: What You Need to Know
Venmo is considered one of the most social-friendly payments splitting platforms. It was started for that very reason—two friends were looking for an easy way to pay each other back, and its positioning on social media has seen it become one of the most popular peer-to-peer payment apps. This large user base makes it a platform that small businesses should not ignore.
Is it a good option for you? This article unpacks everything you need to know.
How Does Venmo Work and What is Venmo for Business?
Venmo is a money transfer service that allows customers to send money to friends or businesses. Venmo is differentiated from other money transfer services—including its parent company PayPal— by its mobile-only platform and social media-like “news feed” that publicly shows the transactions a user makes.
Transactions are made through the app, where users can load their Venmo account from a bank account, bank credit or debit card, or a Venmo debit card. Unless one has their settings in private mode, people can comment or react to the transactions one makes.
A Venmo business account allows businesses to accept payments from customers through the app. As with all payment processors, there is a fee charged. Venmo for business fees includes a processing fee of 2.9 percent plus 30 cents per transaction.
Venmo’s Business Features
Though it was initially created for peer-to-peer payments, Venmo has evolved to offer several features tailored specifically for businesses.
Online Integration
Venmo is easily integrated into online platforms, making it a great option for businesses with an online store. Like they do with a credit or debit card, Venmo users can purchase items directly from a website or app, provided it is approved. This can improve sales for businesses.
Have you ever wondered, “Can I have two Venmo accounts?” Or “How do I set up a second Venmo account?” If so, you’ll be happy to know that Venmo conveniently allows a user to have more than one Venmo account, and they can even be linked to the same bank account easily.
Speed
Venmo provides users instant transfer of money to and from their bank account, allowing businesses to receive money on the same day. Business owners can also use Venmo to issue payments, meaning they can pay service providers without a long turnaround period.
Connection to Customers
The app’s social media feature allows businesses to engage and interact with their customers. The sharing feature also helps to market the business as Venmo users love sharing their purchase activity on their social feed.
Security
Venmo is a safe and secure option for both the customer and the business. Not only does it eliminate the handling of physical money, but as a service of PayPal, its data encryption system is highly advanced.
Advantages and Disadvantages of Venmo
What are some of the advantages of using Venmo?
- It’s Social
Users can choose to have transactions appear on Venmo’s social feed, enabling them to share their activity and purchasing recommendations with friends and beyond. This can give your business additional exposure.
- Great for Millennials
If a large number of your customer base is within the millennial demographic, offering Venmo as a payment option could give a boost to sales. Millennials already know how to use Venmo and are accustomed to its speed and convenience.
- Works with PayPal
Merchants with a PayPal account can automatically accept Venmo payments which means you can cover users who are more comfortable using PayPal.
- Free for Customers Paying Via Credit Card
Venmo fees are waived for the consumer if they purchase from an authorized retailer with their credit card.
What are the disadvantages of using Venmo for Business?
- Businesses Cannot Directly Accept Payments
Businesses cannot natively build Venmo acceptance into their website or app. Instead, they are required to go through Braintree or PayPal for payment processing to add the option.
- It is Based Solely in the US
Unlike its parent company Paypal, Venmo currently isn’t available to users outside the US, which is limiting for businesses selling internationally.
- Available Only For Mobile
PayPal only displays Venmo as a checkout option on mobile devices, which leaves out businesses that do not have a strong mobile user base.
Should You Add Venmo to Your Payments Set Up?
Venmo can be a powerful tool for the right business. It has an estimated 10 million users that you can tap into for increased sales. However, it is the young and tech-savvy who know how to set up Venmo and are frequent users. Adding it to your payment options makes sense if this demographic makes up your target market.
In the same breath, Venmo is a mobile wallet, which is a more familiar term among millennials. Your customers cannot shop on desktop and you can not process in-person transactions. If a large number of your customers shop on mobile, paying via Venmo should be a provided option. The great thing is that Venmo business fees are competitive and can offer an extra incentive for your customers to convert.
From payments to credit, setting up a business takes many moving parts. L3 Funding understands the unique needs of small businesses and startups, that’s why we make the merchant funding process quick and simple at some of the best rates in the market. Reach out to us to discuss your best options with our funding professionals.