How to Pay Your Friend with a Credit Card

Summary

You can use a credit card on Venmo, but it could result in a 3% transaction fee. Learn how to avoid the fee and use the card safely.

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Can you use a credit card on Venmo?

Absolutely. To use Venmo, download the app on your iPhone or Android device and set up an account. During setup, you'll be prompted to enter a funding source. This funding source is where the money will be drawn from whenever you pay someone using the Venmo app. You can choose to link a bank account, debit card, gift card, prepaid credit card, or traditional credit card.

How to apply for the Venmo Credit Card

Interested users can apply through the Venmo app. You must be at least 18 years old, live in the US, and have a free Venmo account. Your Venmo account must also be in good standing with Venmo and should be at least 30 days old.

Whats the difference between PayPal and Venmo?

PayPal owns Venmo. PayPal is widely used by businesses and individuals for online transactions. Venmo is used more frequently for peer-to-peer transactions. You can use credit cards on both platforms. PayPal allows significantly higher payments than Venmo and can be used by those living outside the U.S.

What can you use instead of Venmo?

Not sure if Venmo is for you? Here are a few other P2P payment services that may be a better fit for you.

PayPal

PayPal is the original P2P payment service that made it easy to send money to people you know. You can still use your PayPal balance or bank transfer as a payment method, and it won’t cost you a penny. However, the company charges a 2.9% fee (plus a $0.30 flat charge for USD transactions) when you pay using a credit or debit card.

Zelle

Although Zelle is an app, many users discover it through their banks since Zelle partners with most major banking institutions. Since Zelle is compatible with so many banks and credit unions, you can easily transfer money directly from your checking account to the accounts of friends or businesses without needing to use a third-party app. Zelle also allows you to send payments with your credit card without incurring a fee from Zelle, but it’s a good idea to contact your bank or credit union and ask if they’ll hit you with extra fees.

Apple Pay

Apple Pay integrates with iPhone making it easy to send payments to friends, family or retailers. For example, if your friend messages you requesting $25 for your half of a lunch tab, you’ll receive a pop-up notification prompting you to send that payment right now. The service accepts several payment methods, including most credit and debit cards, PayPal, Apple Card and more. You won’t pay a fee if you use a credit card to pay a business, but Apple will charge a 3% fee if you transfer money to an individual using your credit card.

Is Venmo Safe?

All Internet-connected applications can be vulnerable to security breaches. Therefore, Venmo and other platforms directly linked to consumer bank accounts must be held to the highest security standards.

Venmo uses data encryption technology to protect users against unauthorized transactions while storing user information on servers in secure locations. The mobile payment service also gives users the option to log out of lost or stolen phones and set up personal identification number (PIN) codes for mobile applications.

Venmo has taken measures to protect its users from theft. However, your account still could be vulnerable if you share your password, lose your phone, or fall victim to a scam.

Unfortunately, hackers and scammers still have been able to circumvent these safeguards. After gaining access to a user's account, hackers can easily transfer the user's Venmo balance to a new bank account. And by changing the user's linked email address, hackers can reroute a user's transaction notifications, leaving them in the dark until the bank finally notifies them of balance changes long after thefts occur. Stories of Venmo users losing thousands of dollars have been reported.

Regulatory Investigation In February 2021, the Consumer Financial Protection Bureau (CFPB) began investigating Venmo’s treatment of scam victims, following complaints that the payment app had been threatening to send debt collectors to their homes.

The Venmo Mastercard Debit Card: What you need to know

Want more flexibility with your Venmo balance? Venmo offers a Mastercard debit card called the Venmo Mastercard Debit Card that lets you use your Venmo balance anywhere Mastercard is accepted. Venmo limits for the Venmo Mastercard Debit Card are:

  • $2,999.99 per purchase
  • $6,999.99 combined weekly spending for person-to-person payments, payments to authorized merchants and purchases with your Venmo Mastercard Debit Card
  • $400 daily limit for ATM withdrawals, over the counter withdrawals and cash back with purchase transactions

Also, note that there may be fees involved in getting cash out of an ATM, including a $2.50 domestic ATM withdrawal fee. If you want to get cash out with your debit card for free, you can use the MoneyPass ATM network without having to pay this additional charge.

Other Card Benefits

As a Visa card, the Venmo credit card comes with standard Visa protections which include:

  • ID Navigator Identity Theft Protections: Enroll in this complimentary service from Norton LifeLock and get credit monitoring and assistance if your identity is compromised.
  • Travel and Emergency Assistance Services: Get connected with appropriate local emergency resources available, 24 hours a day, 365 days a year
  • Emergency Cash: In case of emergency, Visa can arrange for a wire cash transfer to be available at a location near you, usually within hours of approval by Synchrony
  • Emergency Card Replacement: Visa can work with your bank to expedite the replacement of your card and ship it within 24 to 72 hours

Those who are approved for the Visa Signature version of the card will also get benefits including:

  • Visa Signature Luxury Hotel Benefits: Benefits include best rate guarantee, the potential for a room upgrade upon arrival, a $25 food/beverage credit and continental breakfast daily
  • Silvercar Rental discounts: Get a discount on this all-Audi rental car service of up to 15%
  • Golf Benefits: Enjoy 10% off at over 95 golf courses worldwide through Troon Golf Benefits
  • Visa Signature Concierge: Access to the Visa Signature Concierge who can help with reservations, tickets, bookings and gift purchases.

How does Venmo work?

To send and receive money through Venmo, you need to set up a Venmo account, and you can use the Android or IOS app to get started. There is no web browser option for Venmo — you have to use the mobile app to send money, receive money and make purchases

Now, let’s look at the main ways you can use Venmo.

Send money to family and friends. Venmo is a peer-to-peer money transfer service, meaning that you can use the service to send digital payments to family and friends. If you and your friends order takeout, for example, one person can pay for the entire takeout order and everyone else can pay them back through Venmo. You can even use Venmo to request money from people — if you loan money to a sibling, for example, you can send them a payment request through Venmo. Roommates often use Venmo to split the cost of shared household expenses.

Make purchases online. Since Venmo is owned and operated by PayPal, it shouldn’t surprise you that many online merchants accept Venmo as payment. If you see a PayPal button during checkout, you might have the option to pay with Venmo, as well. Some merchants even offer a Pay With Venmo button on their payment pages. When you make purchases online using Venmo, there are no fees — even if you use a credit card.

You can fund your Venmo account with credit cards or your checking account, and you can fund money transfers with a credit card, debit card, prepaid debit card or a checking account, but not a savings account.

You need a bank account to make cash withdrawals, so if you plan to receive funds via Venmo and aim to cash them out, you need to link your Venmo account to a bank account.

Are Venmo transactions public?

Venmo transactions can be public, but they don’t have to be. Venmo has three different privacy settings, and you can choose which setting you want to be the default for your purchases. You can also change your settings with each purchase or transaction.

Here are Venmo’s privacy settings, as outlined on its website:

  • Public: The transaction will be shared on the Venmo public feed and anyone on the internet will be able to see it.
  • Friends only: The transaction will only be shared with your Venmo friends and with the other participant’s Venmo friends.
  • Private: Venmo will not share the transaction anywhere other than your own personal feed and if it’s a payment to another user, the feed of the other person in the payment.

Compare Venmo Credit Cards With Other Cards

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Does Venmo offer cash-back rewards?

Yes. Venmo offers cash-back rewards, which are based on your spending activity in your statement. For instance, Venmo will sort purchases by categories, like travel, utilities, groceries, etc, and then you can earn 3 per cent cash back on your “top spend” category, which is where you spend the most money. You can receive 2 per cent on your second-highest spend category, and 1 per cent on everything else you spend on during the billing period.

Cash rewards are transferred to your Venmo account at the end of every billing period. You can use it like your Venmo balance, whether that’s to pay friends, shop online, or transfer money to your bank or debit card on your account.

Alternatives to Venmo

Venmo is not the only payments game in town. Here are three alternatives.

1. Google Pay

You can use Google Pay in much the same way you use Venmo. While it can typically be used to make purchases without incurring a fee (unless the merchant charges a fee of its own), you'll likely incur a small fee if you use a credit card or debit card.

2. Apple Pay

Apple Pay allows you to link your credit or debit card to a digital wallet. It's free to use Apple Pay at the register, at least from Apple's end. If a merchant charges for the use of credit cards, they won't make an exception for Apple Pay. Like Venmo, if Apple Pay is linked to a credit card and you use it to transfer money to an individual, you'll be hit with a small fee.

3. Zelle

Zelle will not charge you to send money through their app, but you'll need to check with your bank to ensure it won't charge a fee. Before downloading the app, check if your bank offers Zelle. Most do.

As long as you set up separate preferred payment methods when you sign up to be a Venmo user, you're likely to appreciate the convenience of being able to pay on the go. No matter where you are, you can make a Venmo payment without breaking a stride, and in today's busy world, that's value-added.

Did You Know? Venmo offers a credit card. Check out The Ascent's Venmo credit card review.

Which Credit Card Should You Use on Venmo?

Using a credit card on Venmo to pay family and friends is rarely, if ever, worth it because of the 3% transaction fee. However, using your credit card on Venmo can help you reach the minimum spending requirement for a signup bonus on a new credit card, which could outweigh the 3% fee. Even so, there probably are lower-cost ways to reach your minimum spend.

If you’re shopping at a retailer that accepts Venmo, adding your best rewards credit card to your Venmo account could help you make the most of your credit card rewards.

Keep in mind that tiered rewards are based on merchant categories. For example, your rewards program might dictate that to earn higher rewards on dining purchases, the transaction must come through with a merchant category code (MCC) tied to restaurants or eating places. The merchant category on Venmo purchases may not come through with dining-related MCCs, meaning you may not earn the maximum amount of rewards. In that case, you might just want to use your physical credit card, but having it at the ready on Venmo could come in handy.

Make sure the card you add to your account has enough available credit for the types of transactions you’ll make so you’ll avoid denied transactions or penalties for exceeding your credit limit.

Venmo limits the number of credit and debits cards you can have on your account in a rolling six-month period of time. You can have no more than four active or deleted cards on your account in the past six months. If you remove your fourth card from your account, for example, you may not be able to replace it with another card for a few months. Keep this in mind if you plan to rotate your cards periodically in order to max out your credit card rewards.

3 ways to pay a friend with a debit card or bank account

While Cash App, Venmo, and PayPal all offer debit card transactions at no extra cost, they are the few that allow credit card payments as well.

If you don’t have a credit card or want to save on transaction fees, you have the option of adding a debit card or bank account to send money to friends.

1. Apple Pay

Earlier this year, Apple discontinued person-to-person credit card payments, but you can use debit cards to transfer money to someone else.

If you have an iPhone, you have a fairly instant way of sending money online. In Messages, you can tap the Apple Pay button in a text conversation with the friend you want to send money to. Enter the amount, then approve the transaction using Touch ID or Face ID.

As long as your friend also has an eligible Apple device with a linked debit card or Apple Cash, the payment is seamless. Your debit card is added to your Apple Wallet so you can avoid manually entering card information when it comes time to send a payment.

2. Google Pay

The Google Pay app allows you to send money to anyone with a phone number or email address. If you’re sending money to another person, Google Pay only allows using a debit card or bank account.

The friend you’re sending money to doesn’t need the Google Pay app, but they’ll need a Google account. Your friend will get an email or text once the money is sent and will have to use their Google account to log in and claim their cash.

3. Zelle

To start using Zelle, you may not even need the app. If your bank or credit union allows you to send money with Zelle, you can use your bank’s app to do it. If your financial institution doesn’t offer Zelle, you can download the app to send money. (Check out Zelle’s full list of partners to see if your bank is eligible.)

The friend you’re sending money to doesn’t need to belong to the same bank as you for you to initiate the payment. If your friend already has Zelle (or their bank partners with Zelle), they can get their money within minutes. If they don’t have Zelle, they can download the app, sign up, and enter the banking information where they want the money to go.

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The Bottom Line

Over the course of its existence, Venmo has become one of the most popular peer-to-peer payment platforms, eventually branching out to merchant services and offering its own branded credit card.

While Venmo is easy to use, its users are still vulnerable to hacks and cyber theft. Use Venmo with the same caution that you would with any other online payment platform, including monitoring transactions and changing passwords regularly. When used by consumers, Venmo offers a free platform for transferring money between private parties, with options to fund transactions via credit card for a small fee. For businesses, it offers the benefit of increased visibility, along with a standard processing fee.

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