Transcript: Venmo is created for people to transfer money to other people they know. You’re probably thinking I know my customers, so can I accept Venmo as a form of payment for my services? The short answer is Maybe. You are prohibited to accept Venmo for your business unless you’ve been approved by Venmo to do so. 

Look I’m a business owner and I get it….if someone wants to give you money, you welcome it with open arms, say thank you and figure out the details as you go. Especially during Covid with shelter in place, You want to make it easy for your customers and more importantly, you want to get paid.  So should you allow your customers to pay you via Venmo? There is a right answer and then there is reality. Only you know what’s best for your business. Our advice is to make an informed decision with eyes wide open.

Do your research. 

For instance Did you know, with Venmo there is a transaction limit of under $300. There is also a weekly dollar limit for all transactions you sent and received. Based on your business model, does Venmo still make sense?

Maybe you are a solo-preneur and the transaction limits doesn’t impact you. 

And If you say yes to Venmo does that mean you will eventually say yes to Zelle, google pay, Samsung pay, Alipay, Apple Pay, on top of check, cash and credit cards? And let’s say you successfully set all all these payment methods, how much effort is required of you to associate the payment received to a customer’s outstanding balance? Most small business owners struggle with effectively grasping who is supposed to pay them, when, how much, and on whose behalf? So ask yourself, are you going to be better off or Are you over complicating your business? And Is there a better solution?

Collecting payments can be such a stressful and time consuming process that when a customer whips out their phone and says ‘can I pay you in Venmo?’ It can be very tempting to say ‘absolutely!’

Well, we’re not here to tell you that you should say no but we wanted to make you aware of what saying yes means.  Using Venmo might seem like a free move but there’s truth to that old saying, “there’s no such thing as a free lunch.”

What you need to know about using Venmo for business transactions

Venmo is beautifully designed for payments between friends and that’s exactly what it’s built for.  In fact, Venmo states explicitly in their terms that unless directly authorized by Venmo, you’re actually not allowed to receive business transactions for a good or service!  This has to do with Venmo’s licensing and regulatory requirements.  Unless you go through Venmo’s merchant onboarding process, you’re actually violating the terms of use with Venmo.

And their legal team is pretty clear that they have the right to reverse the payment for any commercial transaction performed without previous authorization.  That means that you would lose these payments with no recourse and you can imagine how devastating that can be for your business.

Even though this may not have happened to you and it seems like no one is really paying attention, it is a scenario that you should be thinking about.  PayPal, a similar digital payment system, has become notorious for freezing accounts for up to 180 days as they go through their compliance process (while Paypal doesn’t disclose how many funds are frozen at one time, there are 383,000 search results for “How do I unfreeze my PayPal account?”).  And considering that PayPal has recently purchased Venmo, you can be sure that they will make sure to stay in regulators’ good graces by becoming more strict in making sure they are only processing valid payments.

Aside from the regulatory concerns there are other reasons why you may want to think twice about accepting Venmo. 

4 key things you may want to consider before accepting Venmo.

1. Record keeping

For one, these simple apps were not meant to keep track of invoices.  So finding out who paid and who didn’t at the end of the month can be a nightmare; as is calculating revenue at tax time.  Venmo sacrifices organization for ease, when many business-first systems like Quickbooks or Finli give you the tools, reports, and features you need to manage your business.

2. Customer privacy (this is a hot topic!)

Another thing to keep in mind is privacy.  While you can control who sees the transaction on your side, the customer can set whatever views they want in Venmo.  So if you have concerns with the world seeing your pricing or customers, this can be an issue.

3. Cash flow

Yet another thing to consider is availability of funds.  Chances are you don’t pay your expenses through Venmo, so you need to transfer funds from Venmo to a traditional bank account.  This can be expedited for a 1% fee but otherwise can take up to 5 days.  And on top of that, the typical daily limit is under $3,000.  So you need to constantly cash manage your accounts to make sure you’re bringing over as much money as you can each day from Venmo so that you have the funds to pay your bills. 

4. Time it takes to reconcile payments

Finally, if you’re accepting Venmo you’re probably accepting whatever digital payment app that the customer uses which may include PayPal, Zelle, Cash App, and others in a list that keeps on growing.  When you start to open the door to digital payments of any means, you’ve set yourself up to manage all those different platforms yourself offline wasting time and money and losing the benefit that accepting digital payments should give you!  

So while the best answer might seem to be, ‘yes, we take Venmo,’ the best answer actually might be no.  Does this stress you out?  Trust us, the digital payment revolution should be something you should be thrilled about – it’s easier than ever now to make sure you are paid on time.  That’s exactly why we created a mobile payment app in Finli, so that you can get everything you need in a business support system and your customers get the same digital experience that they’ve grown accustomed to.  Whatever method you choose, the important thing is that you offer your customers a solution that is just as easy as Venmo, which has set a new standard for convenience.


 

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