Using Venmo, Amazon Payments, and Serve to Earn Miles with Debit Cards

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Yesterday I wrote about the potential to earn miles by purchasing money orders.  However, you can also earn Alaska Air or Delta miles by transferring money to others using either Venmo, Amazon Payments, or Serve.

As always, you should ensure that you have a legitimate reason to transfer money to your friend or partner to ensure that your accounts are not flagged by Amazon, Venmo, Serve or your bank and risk being frozen.

However, don’t transfer money to yourself and don’t set up 2 accounts in your name and transfer money between them.  If you do that, you risk freezing your account and the money in it!

My suspicion is that it is unprofitable for banks to continue to award miles for using debit cards with payment transfer services, so I wouldn’t expect this to continue for long.

Venmo

Venmo used to allow folks to transfer up to $2,500 a month without a fee using a credit card.  This was a great way to meet the minimum spending requirements for credit cards for free, but you now have to pay a 3% fee to use Venmo to transfer money with a credit card.  In my opinion, it is is still worth paying a 3% fee to get you a 50,000 point credit card sign-up bonus if you have no other way of meeting that minimum spending requirement.

But Venmo recently started accepting debit cards and they do not charge a fee for “Debit cards issued by major banks.”  They do charge a 3% fee for debit cards issued by smaller banks.  However, this page says that using debit cards is always free, so I’m not sure which page is accurate.

There is a $2,000 monthly limit on the amount you can transfer using a debit card with a Venmo account.

I had more than 3 credit cards listed on my Venmo account (the maximum allowed), so I contacted Venmo to remove the cards and indicated that I wanted to use a debit card.  I never heard back from them, but I could add a debit card 10 days later.

I recently transferred money to Emily to pay for dinner using both the Alaska Air and Delta debit card and was not charged a 3% fee.  However, my Delta debit card shows a transaction of $13 from Venmo and also still has a pending charge of 2 cents from Venmo.

I’m not sure if this 2 cents is a fee (if so it is 0.15%), or if it will fall off my statement.

But fees could always change, so do a test transaction for yourself before transferring lots of money.

My statements haven’t closed as yet, so I don’t  know if I’ll earn miles, but will post an update in early September.

Amazon Payments

Despite angry comments proclaiming Amazon Payments’ demise over a year ago, you can still use Amazon payments to transfer up to $1,000 fee-free per month between persons if you select the “goods & services” option. 

This limit applies to both credit cards and debit cards, so it could be better to use Amazon Payments to help meet the minimum spending on credit cards since most other payment sites charge a fee for using a credit card.

Serve

American Express Serve was very frustrating to use with a credit card because the limits were low and funding your Serve account with a credit card and withdrawing the amount often resulted in accounts suspended or closed.  In my observation, American Express seems to have the best set of internal controls to deter folks from taking advantage of their products and services.

But it is unclear if American Express is as strict with funding a Serve account with a debit card.

There are no fees up to March 15, 2013 for adding money to your Serve account using a credit card OR a debit card.  You can add up to $100 a day to your Serve account using a debit card with a monthly limit of $1,000 for debit card funding.

I won’t be using Serve because of the hassle factor, but you can get $25 for opening a Serve account, funding it AND spending $25 or more elsewhere, so you’re getting $25 for free.

Bottom Line:  You can transfer money to others for legitimate reasons and earn miles when you use a debit card.  But don’t abuse this because having you bank account closed, with your money in it, is usually a much bigger deal than just having a credit card closed.  And you don’t want to be blacklisted from the banks either.