How Does Venmo Make Money? Behind the Business Model of America’s Favorite Payment App

Venmo: More Than Just a Free Payment App

Venmo has become a household name in peer-to-peer payments. Whether you’re splitting a dinner bill, paying rent, or sending a birthday gift, chances are you’ve used it. Owned by PayPal, Venmo processed over $244 billion in payments in 2023 alone. With no upfront cost to download or use for personal transactions, many people naturally ask: how does Venmo make money?

The answer lies in a mix of transaction fees, business services, affiliate partnerships, and value-added features. This article will break down each revenue stream and explain how Venmo evolved from a simple peer-to-peer app into a money-making machine.

1. Transaction Fees for Instant Transfers

One of Venmo’s most visible and steady revenue streams comes from instant transfer fees. While standard bank transfers are free and take 1–3 days, many users opt for Venmo’s instant deposit feature.

• Fee: 1.75% per transaction (as of 2024), with a minimum of $0.25 and a maximum of $25.
• Use Case: If you need your money right away, you’ll pay this small fee to move it instantly to your debit card or bank.

💡 Revenue Potential: With millions of users choosing instant transfers, this fee generates significant passive income for Venmo daily.

2. Merchant Payments and Venmo Business Profiles

Venmo isn’t just for friends anymore. The app now offers Venmo Business Profiles, which allow small businesses and freelancers to accept payments directly.

• Fees for Businesses: 1.9% + $0.10 per transaction.
• Benefit: Businesses can accept payments using QR codes and get exposure through the Venmo social feed.

In 2023, Venmo began to aggressively expand its merchant base by integrating with PayPal’s vast ecosystem. This means when you check out online at stores like Uber, Grubhub, or Poshmark, you might see the Venmo button—every time you use it, Venmo earns a fee.

💼 Fact: Venmo reported a 40% year-over-year growth in business profile adoption in 2023, as more micro-businesses look for easy mobile payment options.

3. Interchange Fees via the Venmo Debit Card

Venmo launched a physical debit card in partnership with Mastercard. When users pay with the card, Venmo earns interchange fees from the merchant.

• Interchange Fee Revenue: While it varies, it’s typically 1%–2% of the transaction amount.
• Extra Perk: Users get cashback deals through partners (like Target, Chevron, Dunkin’), which are sponsored and also bring in promotional revenue for Venmo.

🔍 In 2022, Venmo reportedly issued over 1 million debit cards and saw usage skyrocket among users under 35.

4. Crypto Trading Fees

Since 2021, Venmo has allowed users to buy, sell, and hold cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

• Fee Structure: Ranges from $0.50 for small transactions to 2.3% for larger trades.
• Why It Matters: Though not a full-featured crypto exchange, Venmo benefits from the growing popularity of casual crypto investing.

In 2023, PayPal (Venmo’s parent company) made over $300 million from crypto trading fees across its platforms, including Venmo.

🪙 Trend: Younger users often start their crypto journey through Venmo due to its familiar interface and low barriers to entry.

5. Interest on User Balances

Like most digital wallets, Venmo holds funds in user accounts before they are transferred out or used for purchases.

• How They Profit: These balances are held in pooled bank accounts, and Venmo earns interest on the funds—even though it doesn’t pay that interest back to users.
• Revenue Model: This is a classic “float” strategy used by many fintech companies.

💰 In 2024, it’s estimated that Venmo held between $2–4 billion in user funds on average, which generates meaningful passive interest income.

6. Cashback & Affiliate Offers

Venmo partners with retailers to offer targeted cashback deals, especially through its debit card and app feed. These deals are not just a perk for users—they’re revenue drivers.

• Business Model: Retailers pay Venmo for placement, visibility, or performance-based actions (e.g., purchases through a cashback link).
• User Incentive: Get money back for spending at participating locations.

This affiliate marketing model allows Venmo to monetize user purchases without charging the user directly.

7. Venmo Credit Card: Another Revenue Arm

Launched in late 2020, the Venmo Credit Card, issued by Synchrony Bank, adds another layer of income.

• Key Features: 3% cashback on top spending category, 2% on the next, 1% on everything else.
• Venmo Makes Money Through:
  • Interchange fees from merchants
  • Interest on unpaid balances
  • Annual promotional partnerships

The credit card is fully integrated into the app, making it seamless to track spending and manage rewards—another sticky product in the ecosystem.

8. Expanding Internationally?

While Venmo is currently U.S.-only, there have been hints at global expansion in the future. If Venmo successfully breaks into new markets, especially among Gen Z users, its revenue potential could grow significantly.

For now, it trails other global players like Revolut or Wise, but with PayPal’s backing, it could eventually scale into a multinational service.

Is Venmo Profitable?

While exact profitability isn’t disclosed separately (since it’s part of PayPal), analysts estimate Venmo contributes a meaningful chunk to PayPal’s overall net income, especially as more features monetize successfully.

In PayPal’s Q4 2023 earnings call, executives noted that Venmo is becoming “more than just a P2P app—it’s a financial hub.” This reflects a broader push toward turning casual users into paying customers through a range of financial services.

Final Thoughts: Why the Model Works

So, how does Venmo make money? In short, Venmo is monetizing convenience. The app offers a seamless user experience for splitting bills, paying friends, and now shopping, investing, and managing rewards. Every new feature creates a potential revenue stream.

Here’s a quick breakdown of how Venmo makes money in 2025:

As digital finance continues to evolve, Venmo’s real value is in its user base—over 78 million and growing—and its ability to layer financial services on top of everyday payments.