By Joseph Chalfant
The popular payment app Venmo is changing its policies on fees for business and personal transactions conducted on the platform.
The company decided to allow users to engage in business transactions for a small fee. Previously, users who used their personal accounts for business purposes would have their accounts suspended. In a terms-of-service update, the company notified users of the switch that will take effect on July 20.
Users will be charged a 1.9% plus 10 cent fee that will automatically be deducted during the transaction when using a business profile, according to the Wall Street Journal. Major companies who use Venmo as a payment method, like Uber and DoorDash, are subject to the same fee.
Users will be given the ability to switch between personal and business transactions in the payment interface.
Users who conduct peer-to-peer transfers with personal accounts will be subjected to a fee hike as well, according to USA Today.
On August 2, the company will raise rates for instant transfers from a 1% base fee with a 25 cent fee minimum and $10 maximum to a 1.5% base fee with an increased maximum of $15. The move will bring Venmo up to the same rates as Cash App.
An important point to note is that the only personal fees being changed are to instant transfers. Instant transfers allow users to send money to their bank accounts within minutes. When users opt to use normal transfers, they can find the money in their accounts within 1-3 business days. The company has not indicated that any fees would be applied to these normal transfers.
The change in fees could be an attempt to further profit off the app’s explosion in popularity during the COVID-19 pandemic. Dan Schulman, CEO of Venmo’s parent company PayPal, said in February that Venmo’s user base increased by 32% over 2020, amounting to 70 million active users. He also said that $51 billion was transferred across the app in the first quarter, according to the Wall Street Journal.
