TechCrunch and other media sites announced the news that Venmo will now be charging for its faster payment option. Users can still send funds for free if they wait and have funds settle through ACH which can take a day or more. Senders wanting to transfer funds more quickly will see a charge of 1% of the dollar value. Presumably, this is a part of PayPal’s on-going quest to turn the vast Venmo user base into a money-making asset:
The fee for instant transfers where a user would move their Venmo balance to their bank account via debit card used to be just $0.25, but the company shared in an email to users late Friday that the fee is increasing to 1 percent of the transferred amount with the company taking at least a $0.25 fee.
So, basically, if you’re transferring any more than $25 in the future via this method, you’re going to end up paying Venmo more thanks to this new fee structure.
It will be fascinating to see how the market reacts to this change. This could say a lot about how important payment speed is to consumers. As the U.S. begins launching real-time payments, advocates will often site that consumers demand that payments are received quickly. If we find out through Venmo’s price change that indeed consumers like faster payments, but are really only willing to pay for it in specific, dire circumstances, then that may be valuable information for other faster and real-time consumer payment types that are beginning to launch. It may signal when and how much consumers are likely to pay for faster. It will also be interesting to see if consumers leave Venmo for Early Warning’s Zelle service which is fast and free.
Here’s the official fee disclosure from Venmo’s site:
Our standard transfer service is free to use. A $0.25 fee is deducted from the transfer amount for each Instant Transfer. Effective on or after November 6, 2018, a fee of 1% of the transfer amount (minimum fee $0.25) will be deducted from the transfer amount for each Instant Transfer.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
