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6 minutes read

How Does Venmo Make Money?: Inside A Successful FinTech App

By Robert Kazmi
By Robert Kazmi
6 minutes read

How does Venmo make money when it allows people to send money to one another for free? Venmo is one of the most successful and popular FinTech apps in the United States, and even though its most popular service is free, Venmo makes money and a lot of it. 

So how does the company do it? This post will explain how Venmo makes money from its popular mobile app. If your organization is interested in creating a digital payments solution, it is important to understand how successful apps are able to make money without driving users away with exorbitant fees and costs. 

The Venmo App

In case you are unfamiliar, the Venmo app enables users to connect their bank account or debit card to their profile and send money to friends, family, or businesses. The Venmo app has been around since 2012 and was eventually acquired by FinTech giant Paypal. The Venmo app has made paying back friends, splitting checks, and sending money to family simple in a world where people seldom use cash anymore. 

There are several different ways Venmo makes money from its app and services. Here are the top ways the Venmo app can generate revenue and make large profits:

  • Pay with Venmo
  • Interchange and withdrawal fees
  • Instant transfers 
  • Check cashing 
  • Interest 
  • Cashback partners 

Pay with Venmo 

Pay with Venmo enables users to use their Venmo information or debit card to pay for goods or services online, in other apps, and select retail locations. The Pay with Venmo program is the company’s top-earning revenue stream. There are many mobile apps that don’t integrate with banking institutions, or users might not feel comfortable linking their bank account with a new app. 

Pay with Venmo enables users to easily and securely link their Venmo account to their account on another app or website. For example, mobile app access to sports wagering has expanded significantly in the past few years; with Pay with Venmo, users can quickly fund their sportsbook accounts and cash out to their Venmo without having to enter all of their banking information on every app they use. 

Venmo charges retailers and other providers a similar charge to Visa or Mastercard for transactions using Pay with Venmo. Merchants are charged .30 cents per transaction plus 2.9 percent of the purchase total. Businesses pay these fees because they know that enabling Pay with Venmo increases their sales opportunities and attracts more customers. 

Interchange and Withdrawal Fees 

In 2018, Venmo started issuing debit cards. Every account on the platform can request a Venmo debit card to use for everyday transactions. Paired with the Venmo app, the debit card can easily split bills with friends during a night out, making it a popular and convenient option for users.

Mastercard powers the debit card offered by Venmo. When users use their Venmo debit card, Venmo collects interchange fees and splits them with Mastercard. In addition to collecting interchange fees, Venmo also collects a withdrawal fee when users use their debit card to withdraw cash from ATMs or financial counters. 

Venmo charges a $2.50 withdrawal fee for ATM withdrawals and $3.00 for over-the-counter withdrawal transactions. Interchange and withdrawal fees don’t generate as much revenue for Venmo as Pay with Venmo, but these fees help the company make money from its debit card offering. 

Instant Transfers 

When you transfer money from Venmo to your bank account, it takes a few days for the funds to become available. However, in 2019, Venmo introduced a new feature for those tired of waiting for their money to arrive in their bank account. Instant transfers were introduced so users could get their money in as little as 30 minutes.  

While instant transfers are convenient for users, the feature also gives Venmo another chance to generate revenue. You cannot instantly transfer funds to your bank account for free on the Venmo app. Instead, Venmo charges 1 percent of the transaction total for instant transfers. The minimum charge is .25 cents, and the maximum instant transfer charge is $10. 

Users who want their money immediately have to pay a convenience fee. This fee helps Venmo make more money and keep providing its peer-to-peer payment services for free. 

Check Cashing 

In 2021, as many people received stimulus checks from the government during the COVID-19 pandemic, Venmo introduced a new cash-checking service. To use cash checking on the Venmo app, users must have a Venmo debit card, or direct deposit enabled. 

Venmo makes cashing a check simple. Users only need to take a picture of the front and back of the check, and it will be deposited into their Venmo account. Venmo generates revenue from its check cashing service by charging a 1 percent fee

To use check cashing on Venmo, the check must be at least 5 dollars or more. This convenient service positions Venmo to provide more services typically associated with traditional banking institutions. 


Like all financial institutions, Venmo uses the cash in accounts to lend to different organizations like banks, investors, etc. Venmo earns interest on the money that the company lends to other organizations

Interest earnings are a common way for financial institutions to earn more money. But, of course, your Venmo balance is FDIC insured, so you don’t have to worry about losing your money due to Venmo’s lending practices. 

Cashback Partners 

One of the significant benefits of using a Venmo debit card is that you have the ability to earn cashback rewards at select merchants. Venmo earns a commission from sales made through this cashback program. Merchants that participate in the Venmo cashback program are likely to attract more customers who want to participate in the savings. As a result, partner merchants pay Venmo a fee to be part of this program.

Final Thoughts 

Most people use Venmo’s trustworthy peer-to-peer payment service free of charge, but as we have demonstrated, there are several different ways Venmo can make money. If your business is interested in building a FinTech app, Venmo provides a great example of how you can generate revenue while also attracting users with a free service.

If you want to build a world-class financial app, you need a strong partner on your side. Reach out to an experienced app development partner to discuss your ideas and learn more about what it will take to build a successful FinTech app.

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