Venmo is a peer-to-peer (p2p) payment app, making it easy to send money to and from friends and family. It's widely used, you can send money by whichever payment method you want, and recipients get funds instantly. However, it was never really designed to be a payment method for businesses!
Negative Points to Using Venmo Apps:
- Payments are public by default
- Can't cancel payments
- No international transactions
- Popular with scammers
Besides, sending money to someone using a credit card, costs that person 3% fee. You can avoid this by paying with a debit card, bank account, or your Venmo balance. Your not really saving any money VS a legitimate merchant processing company like Merchant Processing Solutions!
If you receive money, you MUST move it quickly to your bank account as Venmo is not FDIC Insured so if your money disappears from your Venmo account for whatever reason, unlike your bank, you are NOT protected! !
There are two options to transfer your money to your bank account:
- Venmo to your bank account fast: Instant transfers have a 1.75% fee, with a $0.25 minimum and a $25 maximum.
- Venmo to your bank account that takes one to three business days to settle is FREE!
Although designed for personal to personal payments some folks have started using Venmo to get paid for business products and services. There are multiple reasons why you should NOT use it for business.
- Your customer needs to also get set up as a Venmo user PRIOR to any transaction.
- Your money is NOT secure! Venmo offers NO chargeback protection or fraud protection!
- The buyer has NO protection if they send the money to fraudsters nor can they do a chargeback should they NOT get their product or service.
- Also all the Negative Points from above on the P2P Venmo account
Many people I have spoken to, tell me they use Venmo like cash and feel they do not have to report their earnings to the IRS. In July of the year, the IRS changed the law and now if you collect $600 or more for the sales of goods and services through a payment services company you MUST provide your Tax Info and you will be sent a 1099 for all sales $600 and higher. If you do not submit your tax info for yourself or your business, the payment services company (i.e. Venmo) is required to withhold 24% of those payments and send it to the IRS for backup withholding. This is required by the IRS and helps to ensure that any applicable taxes due on these payments are paid.
If you want to get paid for your products and services LEGALLY, please give Merchant Processing Solutions a call so we can help you determine which product gives you the best solution for your business!
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