As Venmo does battle with Zelle and Square for consumers' P2P payments, one thing is clear: Innovation is not cheap.
Starting on November 6, 2018, Venmo will charge consumers up to a 1 percent fee to use the instant transfer feature on their Venmo accounts.
According to the update in the Venmo User Agreement FAQs, “A $0.25 fee is deducted from the transfer amount for each transfer (effective on or after November 6, 2018, this fee will be changed to 1% of the transfer amount with a minimum fee of $0.25).”
The Ebay Inc. Venmo application (app) is arranged for a photograph on an Apple Inc. iPhone 5s in Washington, D.C., U.S., on Friday, Aug. 22, 2014. After downloading the Venmo mobile-payment app onto a smartphone, users can connect them to bank and credit-card accounts, and then link up with friends to send and receive money on-the-go. Venmo, based in New York, alone handled $314 million in mobile payments in the first quarter of this year, up 62 percent from the prior quarter. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
A spokesperson for PayPal, which owns Venmo, said the change reflects the value of Venmo's service.
Competition from Zelle has been significant, as the bank-led network experienced strong money transfer volume growth in its latest quarter. Also, arch-rival Square with its Cash App has attracted more than 7 million active users as of the end of last year.
The standard process for moving money into and out of a Venmo account is to use a linked checking account and the ACH network, a process that can take up to three business days. The instant transfer process uses an original credit transaction (OCT) on the card networks’ debit card rails to move money from Venmo to a customer’s checking account. The OCT process can take up to 30 minutes, but typically occurs within seconds if not minutes.
Venmo has been struggling as of late with its growth despite recent announcements such is the ability to Pay with Venmo when using the Uber ride share service. Earlier this year Venmo pared back its support for browser-based payments.
Backed by tech billionaires, the crypto-focused digital startup bank's timely application reflects the current administration's openness to new tech-driven banking models — and raises concerns about regulatory impartiality, considering its backers' political ties.
The application follows on the heels of Circle and Wise, as crypto and payment companies seek crypto custody approval and direct access to the Federal Reserve payment system.
The credit union regulator, responding to a recent executive order, has established strict new standards for prosecuting financial crimes. Regulators are now supposed to make criminal referrals only in cases where putative defendants appear to have known they were breaking the law.
Three bank trade associations recommended phasing out paper checks to reduce government payment fraud in a joint statement submitted to the U.S. Treasury.
Baton Rouge-based Investar Holding Corp. has agreed to pay $84 million for Wichita Falls Bancshares, which operates five branches in the Dallas-Fort Worth Metroplex.
