The popularity of cashless, peer-to-peer (P2P) payment services like PayPal-owned Venmo is growing, making Venmo for Business a payment method small businesses should consider. Today, more baby boomers and Gen Xers are joining millennials and Gen Zers in embracing contactless payment methods. Contactless payments require smartphones, which many people keep in their hands or within easy reach, thus eliminating the need to fumble with a purse or wallet to retrieve a credit card. Contactless payments also make checkout faster, which benefits both customers and businesses. If younger people constitute a significant portion of your customer base, you have a new business, or you want to add payment options for your small business, here’s what you need to know about Venmo for Business.
Understanding Venmo and How It Works for Business
Understanding how the core Venmo service works is essential when you’re considering using Venmo for Business. Venmo is one of the most popular P2P payment services, with more than 92 million subscribers. In simple terms, a P2P service is a digital wallet someone can use to pay another person using a mobile phone app. If someone is just getting started with Venmo, they will download the iOS or Android Venmo app, create a personal profile, and link their Venmo account to a bank account, credit card, or debit card. They can then start sending and receiving money from other Venmo users. There’s no cost for using Venmo as a P2P contactless payment solution. However, if you use a credit card to fund the money you’re sending someone, there’s a 3% fee. One of Venmo’s unique features is that, in addition to sending money, it makes user payments public via a social-media-like newsfeed (unless you opt out). This feature can serve as a form of social media marketing for your business.
Setting Up Venmo for Business
While Generation Z and millennials make up 66% of Venmo’s user base, the next natural step is to use Venmo to pay companies for goods or services. Venmo for Business, which launched recently, lets small businesses create business profiles that allow them to accept Venmo as a digital payment method. Since Venmo for Business’ launch, more than 2 million merchants have signed on to accept Venmo for payments. If you want your small business to offer Venmo as a payment option, you must set up a Venmo account, add a business profile, and enter your business information. If you already have a personal Venmo account, open the app, tap your profile icon, and tap Settings (the gear icon). Select Create Business Profile, and follow the prompts.
If you don’t already have a personal Venmo account, you can create a Venmo account and a Venmo business profile at the same time. Download the Venmo app, and choose the Business option. Tap Sign Up. On the next screen, choose Get Started. Type in your mobile number, and tap Send Code. Enter the four-digit code you receive from Venmo to verify your phone number, and tap Submit Code. Enter your name and email address. Create a password. Tap Agree. The business profile sign-up process is quick and easy. After you complete the above steps, enter the following business information: Your employer identification number (EIN) or Social Security number (use an EIN if you’re a partnership or corporation), a business name to display and a username, a short description of your business and business category, a business address (this won’t be displayed), and optional public business information, such as a customer-facing business address, phone number, and social media profiles. Venmo can usually verify a business’s name, address, and EIN automatically. If not, Venmo will ask you to send verification documentation.
Payment Options for Businesses Using Venmo
You can accept Venmo payments from customers using the app, your website, or in person with a QR code. Paying via the Venmo app is straightforward for customers. If a customer wants to pay via the Venmo app, they select your business, input the transaction amount, and tap Send. If necessary, they can use Venmo’s search function to find your business; make sure they tap the Business category to ensure they’re searching businesses. Customers can also use Venmo on your business website or mobile app if they make an online purchase and you’ve set up Venmo as a payment option. In this case, they log in to their Venmo account when completing the purchase. To use Venmo as a payment option on your website or app, you must integrate a Pay With Venmo button via a payment platform such as Braintree or PayPal. You must set up an account with whatever payment platform you choose; you’ll likely need a web developer to integrate the payment button into your website or app.
Accepting payments in person with a QR code is also an option. It’s easy to accept customer payments in person by having them scan your Venmo business profile QR code. Customers can scan the code from a smartphone or tablet screen, or you can opt to print the code. Venmo offers business customers a QR kit to make it easier to accept QR code payments. Venmo’s free QR kit includes five stickers, a wallet card with a lanyard, and a tabletop display with a stand. Your first kit is free; additional ones cost $14.99. After Venmo activates your QR kit, customers can scan the code to be taken directly to your Venmo business profile. After the transaction, the money is transferred from the customer’s Venmo account to your Venmo account using the customer’s Venmo balance or linked funding source. When there’s money sitting in your Venmo account, you can use it to make payments with Venmo or transfer the balance to your linked bank account. There is no cost to do this unless you request an instant transfer, which transfers funds within 30 minutes. There is a 1.75% fee for an instant transfer.
Pros and Cons of Using Venmo for Business
When you’re deciding if your business should get a Venmo business profile and accept Venmo payments, consider these upsides and downsides. Venmo offers a simple and cost-effective way to accept payments for many small businesses. “I’ve found it a convenient backup option,” said Shelly Allhands, a managing director at Evergreen Communications LLC and the owner of Violet’s Fudge. “There have been instances when a customer didn’t have another card and was pleasantly surprised that I accepted Venmo. It simplifies the process by automatically tracking items and customer names and depositing payments directly into my bank account.”
What makes Venmo for Business such an attractive option for small businesses includes low transaction fees, no additional fees, quick and easy setup, no need for approval, no credit check required, and the ability to get started right away. Venmo is one of the most popular P2P apps, it allows quick transfer of funds to a bank account, and is available on Apple, Android, and other mobile platforms. It allows for payments on the go, provides free marketing through the social feed, enables contactless payments, and allows for manual creation and application of sales tax rates if required.
Despite its advantages, Venmo does come with some drawbacks. “Venmo has a slightly less professional feel than Square payments,” said Allhands. “For me, this is mainly because of its social-media-like interface and the ability for others to see your transactions.” Additionally, it’s not widely used among people over age 35, you may miss out on sales from credit card users, and transfer limits make it unsuitable for high-volume businesses. It does not automatically include tax calculations, only allows for one business profile per account, and funds mix in a single Venmo account demanding more accounting attention. It’s limited to one person, with no option for co-owners. Protecting your company when you take online payments of any form is essential because a security incident could cost you time and money and damage your reputation.
Ideal Venmo for Business Companies
If you’re a sole proprietor, freelancer, independent contractor, or another type of small business, Venmo for Business is likely an excellent choice for a P2P payment method. Similarly, if your business sells to young, tech-savvy people in the 16-to-35 age demographic, Venmo is a natural, easy payment option to offer. If you are just starting your business and haven’t set up credit card processing yet, Venmo for Business is an excellent option. And if your business already accepts credit cards and other payment options, Venmo for Business may be a welcome addition to your accepted payment methods.
Here’s a look at how Venmo compares with other P2P options. Venmo has a credit transaction fee ranging from 1.9% to 2.29% plus $0.10 per transaction, with a weekly bank transfer limit of $19,999.99. The fund transfer speed is around one business day, but it can take up to three business days. Google Pay, on the other hand, has a fee of up to 4%, a $5,000 per week transfer limit, and funds take one to five business days to transfer. It can integrate with a POS system and credit card processors. Apple Pay does not charge a credit transaction fee, has a $10,000 per week transfer limit, and funds transfer in one to three business days. It’s already installed on iPhones but is only available to Apple users. Cash App has a 2.75% credit transaction fee, a $10,000 per week transfer limit, and funds transfer in one to three business days. It can be used on iOS and Android. PayPal has a fee of 2.99% plus $0.49 per transaction, allows up to $60,000 per transfer, and funds transfer in one to three business days and can also accept credit cards.
Venmo Business Transaction Limits and Bank Transfer Limits
The rise of cashless, peer-to-peer (P2P) payment services such as PayPal-owned Venmo is making Venmo for Business a viable payment solution for small enterprises. Increasingly, baby boomers and Gen Xers are adopting contactless payment methods, joining the millennials and Gen Zers who have already embraced this technology. The necessity for smartphones with contactless payments has become a non-issue, as most people keep their devices readily accessible, either in their hands or within easy reach. This convenience negates the need to dig through a purse or wallet for a credit card, significantly speeding up the checkout process—an advantage for both customers and businesses.
Venmo for Business offers a modern and efficient way for small businesses to accept payments, particularly appealing if a large part of your customer base is younger people. Additionally, if you’re launching a new business or want to expand the payment options available to your customers, Venmo could be a valuable tool. Its ease of use and growing acceptance make it a compelling choice. Essentially, integrating Venmo for Business can simplify transactions, enhance customer satisfaction, and streamline payment processing in today’s increasingly digital world.