The popularity of cashless, peer-to-peer (P2P) payment services like PayPal-owned Venmo is growing, making Venmo's Venmo for Business something small businesses should consider. The COVID-19 pandemic has vastly increased contactless payment usage, which millennials and Gen Z had already embraced. If younger people make up a large part of your customer base, if you have a new business or if you're seeking additional payment options for your small business, here's what you need to know about Venmo for Business.
What is Venmo, and how does it work?
It's important to understand how the core Venmo service works when considering using Venmo for Business.
Venmo is one of the most popular P2P payment services, with more than 70 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'd 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 could then start sending money to, 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.
What is Venmo for Business?
While teens and millennials sending money to each other make up 82% of Venmo's user base, the next natural step is for them to use Venmo to pay companies for goods or services.
After a pilot program in 2020, Venmo launched Venmo for Business in 2021, letting small businesses create business profiles that allow them to offer and accept Venmo as a payment form. Since the COVID-19 pandemic started, more and more consumers have opted for contactless payment, making Venmo for Business an ideal payment solution.
How to get started with Venmo for Business
If you want your small business to offer Venmo as a payment option and accept Venmo payments from customers, you'll need to set up a Venmo account, add a business profile and enter your business information.
1. Add a business profile to an existing Venmo account.
If you already have a personal Venmo account, open the app, tap your profile icon and tap Settings (gear icon). You should see an option that says Create Business Profile.
2. Create a Venmo account and business profile at the same time.
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. Here's how:
- Download the Venmo app and choose the Business option.
- Tap Sign Up.
- On the next screen, choose Get Started.
- Enter your name and email address.
- Create a password.
- Tap Agree.
- Enter your mobile number and tap Send Code.
- Enter the four-digit code you receive from Venmo to verify your phone number, and then tap Submit Code.
3. Complete your business profile application and get verified.
The business profile signup process is quick and easy. After you've completed the above steps, enter the business information Venmo requests:
- Your employer identification number (EIN) or Social Security number (SSN)
- If you use an EIN, whether you are a partnership or corporation
- A business display name and username
- A short description of your business and business category
- Business address (this won't be displayed)
- Optional public business information, such as a customer-facing business address, phone number and social media profiles
Venmo is usually able to verify a business name, address and EIN automatically. If not, Venmo will ask you to send verification documentation.
You should note a few things here:
- If you're not verified automatically, you can start using your business profile, but there will be limitations on your bank account transfers.
- You'll log in to both your personal Venmo account and business profile using your personal account's credentials.
- You can create only one business profile.
- Venmo and Venmo for Business are currently available only for U.S. residents with U.S. bank accounts.
How does a customer pay my business with Venmo?
After you've set up a Venmo business profile, you can start accepting payments for goods and services. Your customer must have a personal Venmo account. If another business wants to pay you, it will need a Venmo business profile. If you want to pay another business, that business will also need a Venmo business profile.
You can accept Venmo payments from customers via the Venmo app, on your website or in person with a QR code. Customers can also use a Venmo debit or credit card to pay a business.
Paying via the Venmo app
If the customer is paying you via the Venmo app, they'll select your business, input the transaction amount and tap Send. If necessary, they can use Venmo's search function to find your business, tapping the Business category (as opposed to People) to make sure they're searching businesses.
Paying via your business website or mobile app
Customers can also use Venmo on your business website or mobile app if they're making an online purchase and you've set up Venmo as a payment option. In this case, they'll log in to their Venmo account when completing the purchase.
To use Venmo as a payment option on your website or app, you'll need to integrate a Pay With Venmo button. You can do this through a payment platform like Braintree or PayPal. You'll need to set up an account with whatever payment platform you choose, and you'll likely need to hire a web developer to integrate the payment button into your website or app.
Paying in person with a QR code
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 your smartphone or tablet screen, or you can opt to print out the code.
Venmo offers business customers a QR kit to make it easier to accept QR code payments. Venmo's $14.99 QR kit includes:
- Five stickers
- A laminated wallet card with a lanyard
- A plastic tabletop display with stand (2 x 4 x 6 inches)
After Venmo activates your QR kit, customers can scan the code to be taken directly to your Venmo business profile.
How do I receive money from a Venmo Business transaction?
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 1.5% fee for an instant transfer.
In Venmo, you can link only one bank account to receive money. You can't funnel personal payments into your personal checking account and business payments into your business accounts.
However, you do have the option to transfer funds between your personal Venmo account and your business Venmo account. You can keep track of your business's Venmo sales for small business accounting and tax purposes by looking at a listing of business transactions in your business profile.
What are the Venmo Business transaction costs and fees?
Just like credit cards, Venmo charges a fee every time a business transaction is made. For payments made using the Venmo app and a QR code, the fee is 1.9% of the total amount plus 10 cents for each transaction made to your business profile. For online payments, the fee is 2.9% plus 30 cents per transaction. Venmo deducts any applicable fees before your money arrives in your bank account.
Here are some examples for an in-person purchase:
- $100 purchase: $100 x 1.9% = $1.90 + $0.10 = $2 fee
- $10 purchase: $10 x 1.9% = $0.19 + $0.10 = $0.29 fee
Here are some examples for an online purchase:
- $100 purchase: $100 x 2.9% = $2.90 + $0.30 = $3.20 fee
- $10 purchase: $10 x 2.9% = $0.29 + $0.30 = $0.59 fee
Venmo Business transaction limits and bank transfer limits
The maximum transaction amount for a Venmo payment is $2,999.99. Users also have a total weekly spending limit to Venmo authorized merchants of $6,999.99.
For merchants, there is a weekly cap on the amount of money you can transfer from your business Venmo account to your linked bank account. If your identity has not yet been confirmed, the limit is $999.99 per week; if your identity is confirmed, the limit increases to $19,999.99 per week, but in chunks of no more than $2,999.99 for each transfer.
How does Venmo compare to other payment services?
Venmo is only one option for accepting customer payments. There are other digital wallets that work like Venmo, as well as payment aggregators like PayPal and traditional credit card processors.
If you're deciding between Venmo and a credit card processor, note that Venmo's transaction fees are significantly lower and Venmo charges no monthly or other fees.
On the other hand, many more people have credit cards than Venmo accounts. If you accept only Venmo and not credit cards, you'll probably be missing out on sales. However, if your market consists primarily of teens and millennials, this may not be that big of a problem since Venmo use is ubiquitous in that demographic.
Venmo vs. peer-to-peer payment options
Here's a look at how Venmo compares to other peer-to-peer payment (P2P) options:
|Payment service||Credit transaction fee||Bank transfer limits||Fund transfer speed||What you should know|
|Venmo||0% for in-person merchants||$6,999.99 per week||Around 1 business day||Most widely used P2P|
|Google Pay||Up to 4%||$5,000 per week||1-3 business days||Can integrate with a POS system and with credit card processors|
|Apple Pay||3%||$10,000 per week||1-3 business days||Already installed on iPhones, but available to Apple users only|
|Cash App||3%||$7,500 per week||1-2 business days||Can receive payments over Bluetooth|
|PayPal||2.9% + $0.30||Up to $60,000 per transfer||1-3 business days||Can also accept credit cards|
Should your business use Venmo?
When deciding if your business should get a Venmo business profile and accept Venmo payments, consider Venmo's upsides and downsides.
What are Venmo's pros?
Here's what makes Venmo such an attractive option for small businesses:
- It has low transaction fees.
- There are no additional fees.
- Setup is quick and easy.
- There's no need to get approved.
- No credit check is required.
- New businesses can get started right away.
- Venmo is the most popular P2P app.
- You can quickly transfer funds to a bank account.
- It's available on Apple, Android and other mobile platforms.
- It allows for payments on the go.
- The social feed gives your business free marketing.
- It enables contactless payments.
What are Venmo's cons?
Venmo isn't for everyone. Here are some downsides to consider:
- It's not widely used among people over age 35.
- You may miss out on sales from credit card users.
- Transfer limits make it unsuitable for high-volume businesses.
- It does not include tax calculations.
- You can't set up more than one business.
- Funds mix in a single Venmo account, so it demands more accounting attention.
- It's limited to one person, with no option for co-owners.
Who is the ideal Venmo for Business company?
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 out and haven't set up credit card processing yet, Venmo for Business is an excellent option. And if your business is set up for multiple payment options, Venmo for Business may be a welcome addition to your accepted payment methods.