How Does Venmo Make Money?

Venmo is easily one of the most popular apps for transferring money in the United States and a convenient payment option for consumers. As of March there are 85 million users of the Venmo app in the United States. If you reside in the U.S. the odds are that you’ve used Venmo personally or have friends that use it regularly. While the app hasn’t been around for that long (just over a decade as of this writing), it has had a big impact on the market. We frequently get a number of questions about Venmo including “how does Venmo make money,” “how does Venmo compare to Zelle,” “how do Venmo Groups work?“, “Venmo payment was declined, what do I do?“, and “how do I unfreeze my Venmo account?“. These and many other questions served as the impetus for delving into the Venmo business model. Through our own digging through PayPal’s disclosures we found that Venmo’s revenue approached the $1 billion mark in 2021 and is expected to substantially exceed $1 billion in 20221.

Venmo Revenue Chart

Not only has Venmo grown into a massive business, but its growth has also been very rapid, with revenue slated to increase almost tenfold from where it was in 2018. What makes the question of how Venmo makes money especially intriguing is the simple fact that for the vast majority of users, using Venmo is totally free. If you want to send $30 to a friend for your share of dinner and you choose to do so with the Venmo App, you simply need to open the app, find your friend, enter $30 and hit send. That’s it. And in the first three months of 2022, Venmo was responsible for $58 billion of such transactions. So the question is actually a good one, and in the following sections we tackle the question as thoroughly as we can!


What's Covered in This Article

Brief History of Venmo

Venmo was founded in 2009 by two University of Pennsylvania students (Andrew Kortina and Iqram Magdon) that were originally working on a way to send money via mobile phones. You have to remember that back 2009, the iPhone was only a couple years old, and most of the world still used feature phones and so mobile payment was virtually nonexistent. After raising a seed round in 2010 the company released the product to all consumers in March 2012. Venmo was then acquired by Braintree – another payments company – in August 2012 for $26 million. Braintree was then acquired by PayPal in September 2013 for $800 million. In 2013 PayPal was still a subsidiary of eBay. Today, more than 12 years since Venmo’s launch and having now effectively been acquired twice, the payments app is one of the dominant payment options for consumers in the U.S. In fact, Venmo remains the highest-ranking peer-to-peer payment (“p2p payment”) app for mobile phones in the country, though it faces growing competition from Apple Pay, Google Pay, Cash App, Zelle and others. Transferring money between friends is seamless with Venmo and highly cost effective.

Understanding Venmo’s Scale


In 2021, Venmo processed $230 billion of payments according to information disclosed by their parent company PayPal. This marked a 44% increased from 2020. Though Venmo is smaller than Zelle, the volumes that pass through the app is still a staggering sum. The sheer scale of the Venmo platform is important to keep in mind as you think about how Venmo makes money because the answer in a word is: scale. Consumers are very sensitive to paying for services and so naturally this limits the amount that businesses can charge for money transfers. With scale, by merely charging a small percentage of this total volume, the revenue for Venmo can easily be in the hundreds of millions if not the billions, which as shown in the previous section is exactly the levels that the company’s revenue has reached.

How does Venmo Make Money: Primarily in 8 Ways

The business model of Venmo is less well understood mainly because for the vast majority of people, using Venmo is totally free. We believe Venmo currently makes money in 8 different ways but we expect that this number is going to increase over time.

1. Instant Transfers To Your Bank

This is a service that Venmo released in August 2019. The service was designed for customers that are looking to withdraw money but have time constraints. Venmo users that want to withdraw funds from their Venmo account will have to decide between the standard transfer timing or instant withdrawal. The standard transfer takes 1-3 business days to get processed. This is one of the big disadvantages between Venmo and Zelle, which is processed within minutes. Unlike Venmo, charging for instant transfers isn’t one of the ways that Zelle makes money. For Venmo users that opt for the instant transfer, their transactions could be completed in a few minutes. For this convenience Venmo charges users that opt for the instant transfer 1.75% of the proceeds with a minimum of $0.25 and a maximum of $15. For example, if you wish to withdraw $100 and choose the instant transfer option, that will cost you $1.75. Note that the cost of the service used to be lower – PayPal announced that they would be increasing the pricing for this service on May 23, 2022 from 1.5% of the proceeds to 1.75%, which has been the pricing since.

2. Sending Money via Credit Card

If you choose to send money to someone on Venmo, you are usually funding this with your connected bank account. This could be a checking or savings account that is connected to your Venmo account. However, if you wish to use your credit card to send money, you can also do this with Venmo. It however comes at a cost. Currently Venmo will charge you 3% of the amount you are sending, if you choose to send the balance with your credit card. So if you plan to send $100 to someone but will be funding this amount with a credit card, you will be charged $103. How does Venmo make money in this instance? They get the $3.00. In many ways this transaction is a form of a cash advance except you are delivering cash to someone else as opposed to receiving cash from the credit card issuer.

3. Cashing Payroll or Government checks

Another way that Venmo generates revenue is by charging its users for cashing payroll checks and government checks such as stimulus checks (that said, Venmo waived their fees for cashing stimulus checks in 2020 and 2021). Venmo offers a fast way to cash a check and get access to the funds relatively quickly. However they charge 1% of the check amount with a minimum $5 fee. Therefore if you are cashing a $100 check, even though 1% means your fee should be $1, you will end up paying $5 due to the aforementioned minimum. If possible its a good idea to setup direct deposit to your checking account for payroll as they are fast and free.

4. Cashing All Other Types of Checks

If you are cashing a check that is not a payroll or a government check, Venmo’s fees are considerably higher. For these checks Venmo charges a 5% fee with a minimum of $5. So in the example where you’re cashing a $100 personal check, the cost is still $5. However if you’re cashing a $500, the cost would be $25! The reason for the much higher fee likely has to do with the fact that personal checks take longer to process and have higher incidences of fraud (as an aside, this is one the many advantages of using cashier’s checks).

5. Using Venmo To Receive Payments For Goods and Services

If you own a business or have a side hustle where you need to accept payments, having a method of accepting payments other than cash is important. Venmo allows its users to create business profiles and to receive payments for goods and services through the Venmo app. For each transaction related to business goods and services, Venmo charges the business owner a fee of 1.9% of the amount transacted plus $0.10. So for a $100 transaction, they would charge $2.00.

6. Using Venmo To Buy Cryptocurrencies

Venmo announced in April 2021 the launch of Crypto on Venmo. Users of Venmo can now purchase and store cryptocurrencies using the app. Similar to popular exchanges like Coinbase and Binance, Venmo charges a fee per transaction that varies depending on the total amount of crypto that currencies you buy. Currently the range is from just $0.49 for transactions below $4.99, and to 1.8% for transactions between $200 and $1,000. For cryptocurrency transactions above $1,000 you will be charged 1.5% of the transaction value.

7. Venmo Mastercard Debit Card Fees

Venmo launched the Venmo debit card offering, which is a MasterCard-branded debit card, in June 2018. With the card Venmo users can pay anywhere that MasterCard is accepted in the United States. The card also allows users to withdraw funds from their Venmo account at ATMs. This in effect gives users a lot of the functional benefits of a free checking account with their Venmo account. Venmo makes money from this card by charging ATM fees for withdrawals at out of network ATMs and fees for over the counter cash withdrawals (these are withdrawals made at bank tellers and that require a signature). Currently the company charges a $2.50 ATM fee per each withdrawal from an out of network ATM and $3.00 for an over the counter cash withdrawal.

8. Venmo Credit Card Fees

Venmo announced the Venmo Credit Card in October 2020. The issuer of the Venmo Credit Card is Synchrony Bank and it is a Visa card. Today the company offers a Venmo Visa and a Venmo Visa Signature Credit Card. While neither card charges an annual fee, Venmo makes money from its credit card business the way all other companies make money: by charging consumers using a credit card a number of fees. These includes interest on credit card balances, fees for cash advances and fees for late payments. Currently, Venmo charges an annual percentage rate (APR) on its credit cards of the prime rate (which is currently 4%) plus APR’s ranging from 11.99% to 20.99% depending on the account type. For cash advances Venmo charges the prime rate plus 20.99% and the greater of a $10 fee or 5% of the amonut of the cash advance. In addition, Venmo will also charge $40 fee for late payments and $29 for a returned payment. While these figures can seem a little daunting, they are mostly consistent with what many credit card companies charge their cardholders.

Venmo also has a Credit Card Rewards Program, which automatically accrues reward points for spend by category. Currently users can earn cash back rewards of 3% for their top spend category, 2% for the second top spend category and 1% on all other eligible purchases on Venmo person to person transactions.

Services That Venmo Offers For Free

We’ve broken down the various ways that Venmo makes money from its users, but it is important to keep in mind that there are many features and services which Venmo does not charge anything for even though it could; these include:

  • Monthly Maintenance Fees – there is no cost to users for having a Venmo account and also no cost for opening an account (this also applies to business users). As the app increasingly starts to provide traditional banking services, this could become a more notable contrast as most checking accounts have a litany of banking fees.
  • Making online purchases – Venmo does not charge fees for online purchases
  • Sending and Receiving Funds to or from Other Venmo Users – no fees are charged when you send or receive funds to or from other Venmo Users.
  • Standard Electronic Withdrawal – no fee for this, but it does take 1-3 business days
  • Account Statements – these are available for download and have no fees

Final Thoughts: How Does Venmo Make Money?


As summarized in the above table, clearly Venmo is able to monetize its enormous user base in many ways, and we expect this number to grow over time. PayPal management estimated that in 2021 Venmo would generate $900 million of revenue, and expect the business to grow by 50% in 2022. This demonstrates the value of scale as the revenue Venmo is able to generate is less than 0.5% of the total value of transactions that were sent on Venmo in 2021. While the company has had its own share of scandals, for the most part it is trusted by consumers. This is most evident from the app’s 4.9 star rating in the iOS app store based on 14 million reviews and 4.2 star rating from the Google Play store based on over 600,000 reviews. In addition, while there are a lot of different fees that Venmo charges it users, the service is mostly free and importantly, Venmo is transparent about these fees. Despite growing competition, Venmo remains one of the most popular and compelling money transfer services.

You can check out our Venmo FAQ page to learn more.

1The financial information presented is based on our estimates using disclosures from including their SEC filings, earnings releases and presentations and earnings calls.