Today’s customer base is increasingly full of digital natives, and many of them are extremely comfortable using Venmo to pay friends and vendors alike. That might have you wondering if Venmo for Business is the right choice for your small business.
With so many payment options on the market today, it can feel tough to sort through which ones are worth your time and money. Let’s walk through what Venmo is, how you can use it, its potential issues, and some alternatives. By the end, you’ll have a pretty good idea if you should add Venmo to your payment arsenal.
Using Venmo for Small Business Transactions
Venmo began as a peer payment app. It started out as a streamlined method for friends to pay each other — for their portion of a restaurant tab, for rent, movie tickets, and more. It even has a few social features; unless a user opts to make a transaction private, it’s visible in a social feed, detailing who paid who. Active users can even comment on and “like” these transactions.
Today, Venmo for Business can function similarly as a mobile payment app, powering remote and in-person sales alike. You can easily direct customers to your profile by sending them your Venmo profile, or by having them scan your QR code. Alternatively, you can request money from a customer directly, much like an invoice. With Venmo, customers can pay you with a few taps.
You might also enjoy a little “free advertising” by using Venmo. Since most customer transactions are visible on Venmo’s feed, your customer’s friends will see that they purchased from you. They’ll be able to see your business profile easily, too. Who doesn’t like a little effortless word-of-mouth promotion?
Venmo for Business Website Integration
If you’ve purchased anything online, odds are you’ve seen a PayPal button as a checkout option. Venmo for Business can be used as an online payment solution, too (they’re owned by PayPal). If you want, you can add Venmo as an online checkout option on your website. Customers will be redirected to their Venmo app for payment. Some customers are actually more comfortable with this option because they don’t have to provide their card information to you directly online.
Tax Reporting with Venmo for Business
If you receive $600 or more in income via Venmo in a given year, Venmo will send you a 1099-K form at tax time. That can make it a little easier to report your small business income instead of tracking down each transaction.
Understanding Venmo Fees for Small Business
Venmo has a relatively low transaction fee for businesses, and they’re transparent about it: 1.9% plus 10 cents per transaction. This fee is nonrefundable, and it’s applied to every single transaction. To keep your fees as low as possible, it’s best to keep your total transactions as streamlined as you can, and reduce the risk of refunding transactions as much as you can.
Venmo for Business also charges a fee if you opt for an instant transfer when you withdraw money from your digital wallet in Venmo into your business bank account. The instant transfer fee is 1.75% of the total amount (with a minimum fee of 25 cents per transaction and a maximum fee of $15). To minimize those fees, it’s best to opt for a standard transfer. This option has no fee at all, but you’ll have to wait 1-3 business days.
Common Venmo Issues for Small Business
Venmo for Business is a very convenient platform, but it isn’t the perfect tool for everyone. It has some issues. Most commonly, your business profile can get placed on hold anytime fraud is suspected.
Getting your money isn’t the most seamless prospect, either. Since Venmo doesn’t offer a debit card that can be tied to your account, you have to transfer your funds out to use them. You can get them instantly if you want, but there’s a withdrawal fee for instant transfers — it can top out at $15 per withdrawal. If you want a free transfer, you’ll have to wait. For small business owners who need their money quickly, this can be a hassle.
From a practical standpoint, Venmo can be a little tricky because you can only access your profile from a mobile device. They’re also only available to U.S.-based users. If you plan to make international transactions down the road, you’ll need another digital payment solution.
Risks of Using Venmo
Venmo for Business is a safe, encrypted payment platform, but it’s not without risks. Since the platform is owned by PayPal, it’s prone to the same account freezes that PayPal encounters. At any time, your account could be put on hold, meaning your funds are stuck, and you can’t rely on the platform for payments until the issue is resolved.
You can issue refunds manually through Venmo, but their service fees are non-refundable. If you frequently get chargeback requests from customers, you’ll find yourself paying out extra service fees, which can add up over time.
Aside from those risks, however, Venmo for Business is pretty safe.
Alternatives to Venmo for Business
Venmo isn’t the only attractive option for accepting small business payments. In the digital scene, Venmo goes hand in hand with PayPal, which is more widely known. PayPal offers a bigger variety of transaction options, but they have a wider variety of fees. Cash App has a similar premise, too. Meanwhile, if you want to accept in-person credit card swipes, platforms like Stripe or Square will probably better suit your needs.
If you’re looking for a more comprehensive business finance platform, we recommend ZenBusiness Money. Sure, that sounds a bit biased, but we’ve done our best to create a platform that covers all of your business money needs — accepting payments, creating invoices, tracking income and expenses, and even maximizing your tax refund. And you can get started today with a free month trial (and a low monthly fee after that).
We can help!
Starting and managing a business doesn’t have to feel overwhelming. Here at ZenBusiness, we’ll handle the red tape side of your business for you. Whether you’re an established business that needs a money app to manage your business financials or a brand-new entrepreneur looking to start your first LLC or corporation, we’ve got your back. We’ll give you all the tools and support you need to succeed from day one.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Is it smart to use Venmo for business?
As long as a Venmo business account is a good fit for your needs (and your budget), then it’s a smart choice. But if you have other needs, like processing card payments in person, another payment processor might be a better fit. Every small business has unique needs.
Can I use Venmo for small business?
Venmo can be used by small businesses and large businesses alike. Setting up a profile is free and simple, making it an accessible option. You can set up a profile and take payments from customers in the same day.
How do I avoid business fees on Venmo?
You can’t really avoid the flat-rate transaction fees on Venmo; they apply to all transactions. Don’t be tempted to use a personal profile for business transactions, either; this could be in conflict with their user agreement. Generally speaking, only peer-to-peer payments are allowed with a personal profile. If you don’t honor that, you could lose both your business and personal account, among other penalties.
Thankfully, Venmo has a very reasonable seller transaction fee. While it’s subject to change, it’s currently 1.9% plus $0.10 per transaction. A few businesses that have a high volume of transactions might be able to qualify for a volume discount.
If the processing fee is a substantial issue for your finances, you can consider integrating that cost into the price you charge.
Can sole proprietors or independent contractors use Venmo for Business?
Any business entity type can use Venmo for accepting online and mobile payments. When you sign up for the payment platform, Venmo will ask whether your business files taxes under your Social Security number or a separate Employer Identification Number (EIN).
Can I get a Venmo debit card for my business?
Currently, Venmo only offers debit cards for personal profiles. To get a card, you’ll probably need to get a merchant account or a checking account from a more traditional financial institution.
How do I accept QR code payments?
For in-person transactions, you can offer your QR code to clients, which they can scan using their mobile phone app. You can show this QR code on your own device. Alternatively, Venmo also offers a QR kit that you can have displayed at your point of sale for easy use.
Does Venmo impose any bank transfer limits for business accounts?
Venmo does impose a bank transfer limit, but it varies depending on whether you’ve verified your identity. If you aren’t verified, you can only transfer up to $999.99 weekly. Verified accounts can transfer up to $49,999.99 each week. Instant bank transfers will still be subject to fees regardless of whether you’re verified.