NEW YORK: PayPal Holdings Inc. increased a Venmo fee as part of a broader push to make money from the fast-growing mobile payment service, prompting backlash from users on social media.
PayPal said it will charge 1% when Venmo account holders transfer money quickly to their bank accounts, starting Nov 6. When the feature was first rolled out, there was a 25-cent fee on the transactions. Users will still be able to do standard bank transfers for free but those take one to three days, rather than roughly 30 minutes for the other method.
“The change reflects the value that Venmo’s services offer – providing speed and convenience for customers that want to transfer their funds to their bank accounts in 30 minutes or less,” a PayPal spokeswoman wrote in an email.
Venmo has been a hit with young, smartphone-wielding consumers, giving PayPal a valuable source of growth and future transaction volume. But the unit is still unprofitable, and the company has been slowly trying to change that.
Over the summer, Venmo introduced a debit card, giving PayPal a small cut of transactions at retail stores and other merchants. In July, PayPal Chief Operating Officer Bill Ready said 17% of Venmo users had done something that generated revenue in 2018.
“There’s a lot left in front of us,” he said. “It’ll be a multiyear journey.”
Venmo users aren’t so enthused by PayPal’s effort to squeeze more money from their transactions, though that was coupled with some confusion over which transfers will and won’t be subject to the new fee.