Venmo Jumps Into the Physical World

Written by John Peterson
Posted July 1, 2018 at 8:00PM

Like its rival Square, Venmo has accepted the reality that some people just prefer to have a physical card in their wallets.

If nothing else, it's good to have a backup for digital payments. And a card will make spending your Venmo balance in the real world more convenient than through the payment platform's app.

With its new iOS update, launched a week ago today, Venmo signaled a wide release of its debit card.

The peer-to-peer payments company had tested a physical Visa card for months. But the release has revealed that Venmo has instead decided to partner with Mastercard and has a sleek, vertical design.

Users can now "get in line" for the Venmo debit card. And when it's ready to be shipped, they'll be able to choose from a selection of vibrant colors.

Venmo's debit card has a chip for added security and an icon near the chip that also indicates support for contactless payments, as well.

The new card will allow Venmo users to pay anywhere Mastercard is accepted in the U.S. And it will record transactions to the user's Venmo account for easy splits with friends.

Users can also use it at an ATM to withdraw funds from the Venmo's account's balance.

And as an added bonus, there's no fee for signing up for the card.

PayPal, which owns Venmo, declined to explain why the company shifted from working with Visa during the beta testing period to Mastercard. It only responded with a fitting nonanswer. The company said it "continues to have valuable partnerships with both companies."

But because of the change, existing beta customers won't be able to continue using their Visa-branded Venmo cards. They'll instead be invited to sign up for the new Mastercard version, issued by The Bancorp Bank.

One benefit of the move to the new card is that it will no longer feature an ugly lump of dough on the front. Get it? Dough? Okay, bad joke...

The sleeker updated card does away with the poor dough joke and comes in a choice of six colors. This includes black, white, and a selection of brighter colors like yellow, pink, blue, and green.

The company said it learned from beta-tested customers that users prefer a "more simplified look" with personalization options.

Younger millennial customers are Venmo's target market. And they do tend to care what their cards look like, with a preference for metal cards these days.

But Venmo's beta card missed the mark on style in a big way.

Meanwhile, rival Square's Cash Card looks more upscale. It's a black card with the user's laser-printed signature on the front.

Of course, the main benefit of using a Venmo card is not how it looks. It's instead that it makes splitting dinners, drinks, and other purchases easier.

Instead of having to remember to charge your friends for whatever you paid for, the Venmo card purchases will show up in your account with the option to split the amount with your friends.

The card transactions default to private. But you'll have the option to share them in your Venmo feed even if they aren't split.

To take the best advantage of this feature, you'll want to turn the Reloads feature on. This will automatically use your default funding source, your bank account, to add money to your Venmo balance when you need to make a purchase.

Unlike the Visa beta version of the card, cardholders can use the Mastercard-branded Venmo card to withdraw up to $400 per day at ATMs that display the Mastercard, Cirrus, Pulse, or MoneyPulse acceptance marks.

No fees apply for U.S. MoneyPass ATMs. But others will charge a $2.50 ATM domestic withdrawal fee.

Users can also manage their cards from within the Venmo app. The app will allow users to activate their new cards, reset their PINs, and even disable lost or stolen cards.

There are no fees for using the Venmo card for purchases, even if you get cash back at the point of sale.

But if a bank requires a signature to get cash back, you'll have to pay a $3 over-the-counter domestic withdrawal fee, the company says.

Although the card could take the place of a credit card in Venmo users' wallets, it can't replace your bank card. There's no way to deposit cash or checks to your Venmo account, like you can do with a bank. And there's no bill pay functionality.

The Mastercard-Venmo launch coincides with a shift in how younger consumers are using payment cards and banking services.

Many have turned to online banks, like Simple, Varo, and Chime, and transfer money through peer-to-peer payment apps, like PayPal, Venmo, and the bank-backed Zelle.

Tech companies like Apple and Google are also getting into the peer-to-peer space with their own services like Apple Pay Cash and Google Pay Send.

Venmo said its new card is in limited release as of last Monday.

Beta customers who tested the Visa version of the Venmo card will be invited to sign up for the new Mastercard version. And others will need to fill out a form to reserve their spots.

That's all for now.

Until next time,

John Peterson
Pro Trader Today

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