Starting today, July 21, 2021, Venmo is rolling out new policies and fees that are going to impact how you use Venmo for your business.
To sum it up, Venmo is cracking down on small businesses using the “free, no-fee” version and aims to make sure that money being sent or received for goods and services will now have a processing fee attached to it.
For example, let’s say you are a hairstylist and you cut someone’s hair for $35. If they typically pay you via Venmo, they might send over a cute little hair cutting emoji or a happy face with heart eyes or even just a “thanks” and before you know it, that money would be yours with no fees involved. Well, now Venmo says that they are attaching a “goods and services” tag to all accounts, even personal accounts. The buyer will be asked if it is a goods and services purchase and if the buyer says yes, then Venmo will charge the receiver (not the buyer) a 1.9% + 10 cents processing fee. So, that $35 haircut would turn into roughly $34.24 for you as the seller.
Why are these changes good for your business?
A few months back, I posted a YouTube video on why the free versions of Venmo and PayPal are not good for your business to use. If you missed that, check it out here.
So, why do I think this is a good change?
Well, for starters, when you conduct a business transaction on Venmo now, you will automatically receive their Purchase Protection Program which offers some perks for both buyers and sellers in terms of returned products, damaged goods and all sorts of other things. But also, as an Accountant I know that small businesses need to be able to account for all of their sales and using the free version makes that very difficult.
Plus, when using Venmo properly, that 1.9% + $.10 that you’re being charged, will be a tax deductible expense to your business! You will be able to see how much you made in sales and how much was deducted in fees, and easily record those in your bookkeeping.
I highly recommend either get a Venmo business account or make sure your customers are choosing the goods and services option when they pay you.
Venmo says they will be suspending or terminating personal accounts that violate the new policy, and I’m sure you don’t want to deal with that!
For more information on the policy changes, check out Venmo.
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