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What Is Venmo? Everything Business Owners Need to Know
August 3, 2022

What Is Venmo? Everything Business Owners Need to Know

If you’re wondering what Venmo is, this blog post could LITERALLY change your life.

(More or less)

Whether you’re looking for a new way to send friends money, pay for a purchase, or accept payments as a business owner, Venmo is an absolute game-changer.

While we’re going to focus on all three of these aspects in this blog, this post is unique to others that explain what Venmo does because this one places special emphasis on how Venmo can help your business increase profits (including one unique way to do this).

What Is Venmo? A Very Brief Primer for Business Owners

Put simply, Venmo allows users to link a debit or credit card to their Venmo accounts in order to send money to either businesses or friends. Once a payment gets completed within the mobile banking app, it appears on two different feeds: the user's and an overall feed that their friends can view.

This gives users the ability to easily track payments exactly as they would in their other mobile banking apps. The unique thing about Venmo is that users can like and comment on their friends' payments, as well, because of the “public feed” feature.

However, users can also elect to turn off this public feed, so that their contacts aren’t able to see to whom they’ve sent money, how much they sent, or why.

There are plenty of features for business owners, too, like instant payments and plenty of social presence. That being said, there is a credit card fee for merchants (more on that later).

How Does Venmo Work?

Venmo works to carry out mobile payments through its app for anyone with an account. The app itself can be downloaded for free on the Google Play Store and Apple Store, though there are those fees for businesses.

Once someone creates their Venmo account, they can link it to either their bank account, credit card, or debit card. From there, transactions can immediately be made with other users (including businesses). Users can also use the Venmo balance itself as a funding source, meaning no money has to be transferred to their bank account. They can simply keep it in their Venmo account and spend it as if it was cash that they had accepted and put into their wallets.

Can You Use Venmo to Accept Payments for Your Business?

Yes, Venmo can be used for business transactions. You have to create a business account in the app first, and then you'll be able to accept payments in three different ways.

Online, you can accept payments using a Pay With Venmo button on your website, or by using in-app purchases. In person, you can have customers scan your custom QR code.

It couldn’t be easier.

What Are Venmo Business Profiles?

Venmo Business Profiles give you the option to make sales through your Venmo account, as well as view customer analytics and some sales information for your business transactions. You can also utilize the app's social function for a bit of free advertising to the friends of your customers, as they'll be able to see the transactions on their feed.

There are, however, some pros and cons to having a profile on this app.

The Pros of Using a Venmo Business Profile

Here are the pros:

  • No hardware requirements besides your mobile device
  • Low transaction fees
  • Avoid credit card interchange fees
  • Built-in marketing platform
  • Contactless payment options

The Cons of Using a Venmo Business Profile

And here are some potential cons you could face:

  • Customers need a Venmo account
  • You're responsible for the sales tax
  • Higher fees once integrated
  • Transaction limits might be an issue if you're a high-volume business
  • Limited customer management and reporting tools

Can Business Owners Have Business and Personal Accounts?

With a Venmo business profile, you can separate business and personal transactions within one account. This is something you should do the moment you start using Venmo for your business. It isn't worth having your Venmo account frozen or even running into problems with the IRS later down the line.

Once you've set up both these profiles for yourself, toggling between them is easy.

Remember, to create a business profile, you'll need to be a US resident with a Venmo account. To add a business profile, you'll need to be incorporated as a sole proprietor in your state. If your business is a partner, LLC, corporation, or some other entity, you'll need to create a separate business account.

Venmo’s 5 Main Features

Before we move on to detailing some of the biggest benefits of using Venmo, let’s very quickly break down some of its most important features.

1. Tipping

Tipping allows customers to tip at their leisure. You can toggle this in the "Settings" menu, and you can also view the tips you've gotten through an account statement from a browser.

2. QR Code Payment and Sharing

Venmo has QR code payment available. To retrieve your code, tap the "Scan" button, and then head over to "My Code." This code can be shared via text, print, email, and more.

3. Balance Transfers

With Venmo, you can also request a balance transfer between business and personal accounts once you've verified your identity. To transfer a balance, go to the main menu and tap the "Transfer Balance" button. There aren't limits to these transfers, but it does have to be approved by Venmo.

4. Refunds

With Venmo, you can carry out refunds. All you have to do is start a new transaction and then send the money back to the customer. The return transaction will act as a new payment, so you can also add a note that identifies it as a refund.

Also, remember to add the initial transaction fee when you're sending out refunds.

5. Transaction History

Finally, transaction history is crucial for any business, and Venmo gives you easy access. You'll be able to view and also download your transaction history for both your personal and business profiles.

4 Benefits of Adding Venmo to Your eCommerce Website

Now that you know the basics about how Venmo works, what it is, and who uses it, you're ready to understand why your online store should introduce the option ASAP. Luckily, there are plenty of benefits for businesses and consumers alike.

1. Boost Your Conversion Rate

There are a lot of reasons that customers might abandon their carts. A recent survey found that 30% of US shoppers abandoned theirs simply because they had to reenter their payment information.

That's A LOT of lost sales because of something that's so easy for businesses to fix.

One really easy way to do this is by letting your customers pay with Venmo because they’ll already have their payment information entered. That means fewer abandoned carts for you, and plenty of new products for them.

2. Access PayPal Marketing Solutions

Now that you know how Venmo can help reduce your business's cart abandonment, it's time to go over the average order value (AOV).

If you're trying to increase your conversion rates, it's also wise to target your AOV at the same time. With PayPal Smart Payment Buttons, you can do exactly that. PayPal Marketing Solutions is built to help businesses increase sales by helping owners understand their customer base with increased insight across multiple channels.

Here are a few of the most notable features:

  • Shopper insights help businesses discover aggregated and anonymous information, behaviors, and preferences of the customers using PayPal with your eCommerce store. It's perfect for helping you build a marketing strategy with actionable insights. This information could look like the number of people shopping on mobile, which items perform best and even competitor insights.
  • Smart incentives allow businesses to engage directly with PayPal's user base from the very beginning of the customer's journey.

If your eCommerce store is powered by BigCommerce, you'll be able to add the app for PayPal Marketing Solutions directly to your site.

3. Reach More People

When you're considering your payment option strategy, it's important to look at trends.

Specifically, you need to ask yourself two important questions:

  • What payment options are important to your customers?
  • What methods might they be using in the next two to five years?

In just two years, Venmo grew its total payment volume from $6.8 billion to $21 billion.

With the integration of such a hugely popular payment method, you're likely to see your business stay ahead of the curve.

4. Market to Millennials

When you introduce Venmo, you're introducing your brand to a highly engaged audience. It's mostly used by Millennials, and the most highly engaged users check the app between two and three times a week.

So, not only will your online store begin offering a great payment option, but Venmo will also generate exposure for your brand. As we already touched on, that’s because a user who buys from your brand can then decide to share that they made this purchase with their entire feed.

The more often people see friends and family purchasing from your site, the more likely they’ll be to do the same.

Understanding Venmo Business Owner Fees

Unlike your personal account, your Venmo business account is going to come with its own set of transaction fees.

There are two fees you need to know about:

  • 1.9% plus $0.10 per transaction for purchases using the Venmo app and a QR code
  • 3.49% plus $0.49 per transaction for purchases online or in-app with the Braintree gateway or PayPal checkout

It's tempting to want to skip out on these fees by just using a personal account, but you're putting yourself at risk.

Not only does it violate your terms of use with Venmo (meaning your account could get suspended), but it could also get you in trouble with the IRS. They've recently stated that they're going to begin paying closer attention to peer-to-peer platforms for instances of tax evasion.

So, no, these fees aren’t fun to pay, but they’re far preferable to the alternative: paying the price for circumventing tax laws.

Business Profile Limits

The other thing to remember is that there are limits to the amount of money you can send, receive, or transfer to your bank account.

Here are the purchase limits:

  • $24,999.99 per week ($2,499,99 without identity verification)
  • $2,999,99 per single transaction

Here are the transfer limits to your personal bank account:

  • Up to $49,999.99 per week ($999.99 without identity verification)
  • Up to $50,000 for instant transfers per transaction

Setting Up Venmo for Your Business

Now that you better understand how Venmo can benefit your business, let’s talk about how easy it is to actually add Venmo to your eCommerce website.

Setting Up Venmo with PayPal

If your business already accepts PayPal, then you have the built-in option to accept Venmo payments from your business website.

Remember, when you accept Venmo via PayPal, you won't see a Venmo button. Instead, customers will have to select "PayPal Checkout," and then see the option to "pay with PayPal" or "pay with Venmo." From there, they'll be able to choose their Venmo account.

When you accept Venmo payments through PayPal, there isn't an additional fee. There also aren't extra steps you need to take to set it up. You'll have access to the same level of payment protection from Venmo that you do from PayPal.

Setting Up Venmo Without PayPal

Using Venmo without PayPal might seem confusing at first. The product is interconnected with a lot of others, and the setup instructions can initially get a bit complicated.

To get started, you'll need to have Braintree, another PayPal brand. In this instance, Braintree is the platform processing individual transactions, while Venmo is housing all of them. Braintree is like your brain, working to process everything, and Venmo is your body, housing the brain that works to guide it.

Because of this integration, you're going to be directed to check the Braintree compatibility list before you get started. This explains customer and merchant requirements, processing fees, and testing options, and it also allows you to see your Venmo integration before it goes live.

Once it's set up, you can access both Braintree and Venmo through a single control panel. The panel can be accessed through multiple accounts, making it perfect for management by various employees and other stakeholders.

Accepting Venmo Payments as a Small Business

To accept eCommerce payments as a business, you have to first set up a business profile. Once that's done, any of your customers with a Venmo account can buy either in-person or online. If they're shopping in person, they'll need to have the Venmo app installed.

There are a few different methods you can use to start a payment:

  • Request payment from the customer
  • Have the customer look up your account
  • Have a QR code ready for them to scan

For convenience, having the third option on hand is likely to be the easiest.

The 3 Best Venmo Alternatives

Venmo might have over 75 million users, but there are definitely more digital payment options available for consumers and businesses alike.

So, while Venmo is a fantastic payment-processing option that you should definitely add to your website, here are three of the other biggest names out there that you should consider.

1. Apple Pay

Apple Pay is by far the biggest contender in the industry, sitting at over half a billion users globally according to Fortunly. Chances are, you've probably visited dozens of places that accept Apple Pay without even realizing it.

You can also set it up for your business.

2. Google Pay

Google Pay used to be known as Android Pay. These days, it hosts more than 25 million users in the US alone. If you're able to shop with Apple Pay at a certain store, you're likely able to shop with Google Pay, as well.

3. Zelle

Zelle has managed to position itself as Venmo's biggest competition. In 2021 alone, Zelle processed 1.8 billion payments.

Some users find it more convenient, as it links directly to their bank account. In some instances, it's even integrated into their mobile banking app.

Utilizing Venmo to Increase Your Business’s Revenue

Don’t forego easy profits by ignoring the benefits of using Venmo to accept payments on your eCommerce website.

But don’t stop at simply offering Venmo to your customers, either.

Instead, use Dominate Checkout to build your website’s checkout page. Among many other benefits, Dominate comes ready to support customers who want to check out using Venmo.

And EXCLUSIVE TO DOMINATE, your customers can use their PayPal accounts to check out with Venmo from their desktops. This makes it even easier to convert customers.

Oh yeah and Dominate is completely free.

Download Dominate today and start taking advantage of a better checkout page ASAP. 

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