Venmo to charge 3% fee for credit card transactions

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Venmo along with Amazon Payments was one of the best tools in the 40+ Powerful Ways To Complete Your Credit Card Minimum Spending Requirements.  That’s because you could transfer up to $2,000 to another person for free with a credit card.  This made it pretty easy to complete minimum spending requirements for new credit cards.

Of course, Venmo was likely eating the ~3% charge on each credit card transaction and was willing to do so to grow and gain new users.

Well, Vemo announced that it will charge a 3% fee to new users who want to use a credit card to send money to another person.

Existing users will also have to pay the 3% fee, starting from May 1, 2012, once they cross their lifetime free credit card allowance of $500.

Paying 3% to earn miles and points doesn’t make sense in most cases, but it does make sense if you have no other way to meet the minimum spending on a credit card.  For example, I’d gladly pay $90 ( 3% of $3,000) to complete the $3,000 minimum spending requirements on a credit card if that was the only way I’d earn the 50,000 mile sign on bonus.

This isn’t good news, but it isn’t unexpected either.  Venmo, which lacks the deep pockets of Amazon, couldn’t bear the 3% cost indefinitely.  If something is too good to be true, it likely won’t last forever!

Bottom Line:  If you already have a Venmo account, you have only 2 months (March and April) to make fee-free transfers using a credit card before the 3% fee goes into effect.

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21 Responses to Venmo to charge 3% fee for credit card transactions

  1. what about those that have NOT signed up for account, yet? 3% starting today?

  2. It would make sense to pay the 3% fee only if you needed the money back immediately.

    If you don’t need the money back for 6-18 months, you’d be better off putting the minimum spending into your Kiva account and loaning it out, risking an average default rate of 1%. And you can do some good for the world in the meantime.

  3. Does it cost the sender 3% or the receiver 3%? Or both?

  4. @mrredskin – If you haven’t signed up, you’ll have to pay the 3% fee.

    @Mark H – Agreed, though I suspect many folks would rather have the money back so that they can pay off their credit card balance and not pay interest. But I agree that Kiva is a much better choice if you can wait a few months for the money to come back.

    @Hao – 3% to just the sender for using a credit card.

  5. Anyone using Serve.com? Almost similar to Venmo and no load fee until 1st June.

  6. @PY – I used Serve and found it awful. There’s also a very low limit on credit card funding too.

  7. @Million Mile Secrets – Really? I checked the website today and saw the following:
    Currently you can…
    Send & Receive up to $2,500 / Mo
    Receive up to $1,000 per day, up to $2,500 / Mo
    Send up to $1,000 per day, up to $2,500 Max

    I can’t find any place where it says limitations on CC where as Venmo is $2k/m (for those early adopters) and Amazon is $1k/m.

    The system is definitely not as great or ease to use/find info compared to Venmo/Amazon.

  8. @PY
    I guess you did not look into the terms. I remember I saw before the CC limit is very low. Thus, serve is useless. PS. It asked for an ELECTRONIC UPLOAD of SSN copy. THAT SUCKS!

  9. D, would you please talk a bit more about Kiva? How long does it take to get the money back? Any kind of fees involved?

  10. @Li, you’re right!!! I totally missed that!! Strangely it didn’t ask me for a digital upload of my SSN or my complete SSN but it did to my wife’s application!!! But then again, I signed her up a few weeks later and it didn’t ask for the SSN stuff again…

    @Million Mile Secrets – you’re right, it’s not worth the time….

  11. @Li – Kiva is a company that allows people with Paypal accounts and credit cards to fund microfinance loans. You can loan in increments of $25. The borrower makes payments back to the lenders either monthly or at the end of the loan term. Loan terms stretch from five to forty months. There is a small risk that the borrower may default or that currency fluxuations may return less than 100% of the loan amount to the lenders.
    As confirmed by Randy Peterson on Milepoint, which has the 4th largest team on Kiva now, at the moment Paypal eats the 3% service charge for using a credit card, allowing 100% of your loan money to go to Kiva. I assume that Paypal makes this service part of their corporate charitable giving.
    Kiva is a good way to meet minimum credit card bonus spending thresholds. When the money is returned to you at the end of the loan, you can re-lend it to a new borrower, or withdraw it to a Paypal account. There are no extra fees.

  12. @PY - I wish it were a good alternative to Venmo, but it isn’t.

    @Li – I don’t have personal experience with Kiva, but Christian has a great explanation below.

    @Christian – Thanks for the great explanation!

  13. Thanks Christian!

  14. @PY, @MMS and @others,
    Hello,
    Have you tried using Serve.Com for transferring money from a Credit Card?
    Please let me know.

    My Question is: If I get money from one of my CC into Serve.Com – will that be treated as a cash withdrawal by my CC? Or will it be recorded as a purchase on my CC?

    Thanks in advance for your attention and responses.

  15. @Srini – The funding limit for a credit card is too low to even bother. The last time I checked there was a $200 limit on credit card funding.

  16. Pingback: Updates From the World of Miles and Points – 3/27 | Indulge the Wanderlust

  17. It’s actually 250 per month for the serve.com limit, and serve is also being to charge fees starting in July 2012

  18. @dazed It sounds like an ok deal to me (a novice with this idea). Could you let me know if you actually used it? If so, could you answer my question from my previous post, please?

    Thanks in advance for your kind attention & response

  19. Question about amazon payments and venmo. They both say limit of 200k/200 transaction before they will report 1099-k to the IRS. Are they individually or they they combine transactions from both amazon and venmo??

  20. @Doemow- I believe it is an individual limit.

  21. Pingback: Venmo, Amazon Payments, Serve and Debit Cards | Million Mile Secrets

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