PayPal-owned payments app Venmo is set to allow users to sell products and services using their personal accounts, albeit for a fee.
Previously, Venmo users weren’t allowed to receive funds for business transactions via their personal profiles. Anyone found to have been flouting the rules risked having their account suspended.
Now though, Venmo is preparing to relax its rules having issued a letter informing users of its updated terms of service, which are due to take effect from July 20.
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The move will mean that users who don’t necessarily want or need to have a business profile will be legitimately able to accept payments for goods and services. Venmo will subsequently charge them 1.9% of the transaction value plus a $0.10 fee, which is the same as customers who use a business profile to process transactions.
PayPal has been trying to find ways to improve profits from Venmo, particularly given its large collection of users. There has already been a Venmo-branded credit card, which attracted interest because of its integrated QR code that allowed users to carry out practical tasks like splitting the cost of a meal. The company has also been offering cashback via a flexible rewards program.
Venmo has been gaining traction since the pandemic too, with new services supplementing its user-friendly appeal, including an option allowing the direct deposit of stimulus checks into Venmo user accounts.
PayPal has previously reported that the number of people using Venmo has grown substantially, up 32% in 2020 to reach almost 70 million active accounts. Money transfers have been a big part of the appeal, with around $51 billion moved using Venmo in the first quarter, which shows an increase of 63% on the year before. The company is expecting nearly $900 million in revenue for 2021.
However, while the news appears to have been positively received, there is some confusion from users about precisely how the fees will be attached to the correct transactions. Venmo plans to let users have the option of toggling its interface from within the app, in order to identify which payments are destined for goods or services.
These will also be covered by the app's purchase protection plan meaning customers will have back-up if a transaction isn't what it should be, or if goods don’t arrive as described. Meanwhile, transaction fees are simply deducted automatically from money that has been sent.
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- Via WSJ