Venmo adds 1% fee for withdrawing your cash fast
Venmo, the US based money transfer service owned by PayPal, announced on Friday that they would start charging 1% fees for Instant Transfers to your bank account. The new fees will apply from the 6th of November with a $0.25 minimum charge. A 1% of the total transferred is a significant increase since the service was introduced in January for a flat $0.25 charge and no percentage.
Standard Venmo transfers to bank accounts can take two to three days to arrive and so on the 22nd of January they introduced Instant Transfers that would arrive in bank accounts in minutes. The standard flat fee of $0.25 applied regardless of the amount transferred.
For Venmo to now increase the Instant Transfer service fee is a clear sign that they want to start seeing profits from the Venmo service. Free money transfers aren’t actually billed as free on – the fee schedule says that they cost 3% when funded from a bank account, or a debit card. Venmo currently waives the fee the 3% fee but it still applies when a credit card is used to send money. This is a clear sign that further fee increases could be coming down the line.
Venmo users aren’t too pleased with the Instant Transfer fee increase which was announced on Friday, although standard bank transfers that can take two to three days are still free. The 1% fee hike coming into effect 10 months after the service was introduced appears to have given users just enough time to get used to the convenience of of low cost 25c transfers and be hooked on them. Upping the cost so significantly has users threatening to stop using Venmo.
What’s likely to happen in practise is that users will still use the service but move back to slower transfers and only use Instant Transfers paying the 1% fee when they’re desperate for cash.