In the digital age, peer-to-peer payment apps have become a staple in our everyday lives. One such app that has gained significant popularity is Venmo, a mobile payment service owned by PayPal. Venmo allows users to quickly and easily send money to friends, family, or anyone else who has the app. But have you ever wondered how Venmo makes money? After all, it’s free to download and use. In this article, we will delve into the business model of Venmo and explore the various ways it generates revenue.

Transaction Fees

One of the primary ways Venmo makes money is through transaction fees. While most transactions on Venmo are free, the company does charge a 3% fee for certain types of transactions. For instance, if you send money using a credit card, Venmo charges a 3% fee. However, sending money using a debit card or bank account is free.

Venmo Mastercard

In 2018, Venmo introduced the Venmo Mastercard, a debit card that allows users to make purchases directly from their Venmo balance. Venmo earns money from this card through interchange fees. Every time a user makes a purchase with their Venmo card, the merchant pays an interchange fee, a portion of which goes to Venmo.

Instant Transfer Fees

Venmo also offers an Instant Transfer service, which allows users to transfer their Venmo balance to their bank account instantly, rather than waiting the usual 1-3 business days. For this convenience, Venmo charges a 1% fee (with a minimum fee of $0.25 and a maximum fee of $10).

Venmo Business Profiles

Venmo has also started to monetize its platform by allowing businesses to create profiles and accept payments through the app. Businesses are charged a 1.9% + $0.10 fee for every transaction made through Venmo. This opens up a new revenue stream for Venmo, as it taps into the vast market of business transactions.

Partnerships and Affiliates

Another way Venmo generates revenue is through partnerships and affiliate marketing. Venmo partners with various retailers and online stores, offering special deals and discounts to Venmo users. When a user makes a purchase through these partnerships, Venmo receives a commission.

Interest on User Balances

Finally, Venmo makes money from the interest on user balances. When users carry a balance in their Venmo account, the company can use that money to earn interest. While this may not be a significant source of income compared to the others, it still contributes to Venmo’s overall revenue.

In conclusion, while Venmo offers a free service to its users, it has several ways of generating revenue. From transaction fees and interchange fees to business profiles and partnerships, Venmo has diversified its income streams to ensure its profitability. As the digital payment industry continues to grow, it will be interesting to see how Venmo continues to evolve its business model to stay competitive and profitable.


Alex likes to write about anything related to technology, marketing and gadgets. He sometimes reviews the latest tech and also writes on other blogs.