Using Venmo For Business - What You Need To Know | Finli

Using Venmo For Business – What You Need To Know

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Can I Use Venmo for Business?

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 the 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.

Venmo Invoicing

When it comes to receiving payments from customers, invoice management is a must. If you are tired of paper-based invoices, PDFs and other cumbersome solutions, an invoice generator will make your life easier.

Finli was built with the small business owners in mind. We are making online payments a breeze and helping you streamline your invoice creation. With recurring payments, no fees for ACH payments, and an intuitive dashboard, getting paid is now fast and secure.

How Do I Accept a Venmo payment?

In order to receive payments on Venmo, you need to first connect your bank or card with the Venmo account. After you have added the card or account, you can receive money, when someone sends a payment to your Venmo profile. You don’t need to formally accept the money.

Is It Illegal to Use Venmo for Business?

You should not use Venmo to receive payments for your products or services, on your personal profile, unless explicitly authorized by Venmo.

Can I Use Venmo for My Small Business?

Yes, you can use Venmo for your small business, although it has been initially designed for personal use only. You need to set up a Venmo business profile, receive authorization,  and your customers can pay you.

Finli also helps small businesses get paid faster and with little / no fees. Do you know we set NO transaction fees for ACH/Bank Transfers? Sign Up Today.

Is Venmo Free for Businesses?

No, Venmo is not free for businesses. While there are no monthly fees to set up an account, you pay 3% to send money via credit card, 1.9% + $0.10 to receive payments to your business profile, and 1% to 5% of the check amount for depositing  money using the Venmo cash a check feature.

With Finli, you pay no transaction fees for ACH / Bank transfers and you can choose to pass the 3% surcharge for credit card payments on to your customers. You can even use Finli for free, with basic features, or choose our premium options, starting at only $25/month.

Want to give it a try? Sign Up Today (no credit card required).

Why You Shouldn’t Use Venmo for Business?

Many businesses try to disguise business income by using Venmo. The IRS is cracking down on the payments received via Venmo and other payment processing apps, since January 2022. All payments over  $600 for goods and services annually fall into this category and you will receive a 1099 IRS form from Venmo. 

With Finli, you will set up a small business account, which allows you to create professional invoices (even recurring ones), manage and communicate your clients, pay NO transaction fees for ACH / Bank transfers, and get a clear view of your monthly income. With a simple and clutter-free dashboard and encrypted  security features, Finli is the best option for your biz. 

Come test it out today: Sign Up for an account.

Need help getting started? Finli was founded to help small businesses instantly invoice, collect immediate payments, and more seamlessly handle their accounts receivable. Sign up for a free trial here!

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