Venmo is a great peer to peer payment app from PayPal. With Venmo, you can send as well as receive money, split your common payments and even make your daily purchases with a bunch of social features. In this post, you will get the complete details of what is Venmo Friends and Family mode, how is it different from Goods and Services, which mode should you be using for your transactions etc.
Venmo has two payment modes on its app i.e. Venmo Friends and Family and Venmo Goods and Services.
The Venmo Friends and Family payment mode as the name implies is meant for personal transactions i.e. whenever you are sending money to friends and family members. On the other hand, Venmo Goods and Services mode is to be used when you make a payment for commercial transactions i.e. making payments to purchase any goods or services. It could be purchases of tickets, furniture, etc. basically any transaction where you are paying money to a seller for buying goods and services.
In this post, we will cover the complete details of what is Venmo Friends and Family Setting, how is it different from Goods and Services, what are the limits and other implications of using this feature.
Previously, Venmo was only meant for personal transactions. However, Venmo has steadily been expanding the scope of its services enabling users to make payments using Venmo for commercial transactions i.e. for making purchases and payments at shops, restaurants, for gas etc. with the option to use touchless means like QR code as well as the Venmo Card.
With the rapidly growing use of payment wallets like Venmo for commercial transactions being preferred both by consumers and businesses, there has also been increase in tax regulation and increasing frauds .
It becomes necessary to distinguish the personal and commercial payments that you make using Venmo.
Venmo Friends and Family vs Venmo Goods and Service
Venmo Friends and Family
- Meant to be used for making Venmo payments to friends and family members
- No Venmo fees for sending or receiving money (via Venmo balance or debit card, Bank may charge its own fees if you use a credit card)
- Payment is not covered by Venmo Purchase Protection
- Payment is not reportable to IRS by Venmo as it is considered personal receipt
Venmo Goods and Service
- Meant for making payments for purchase transactions on Venmo – Usually which are not paid to Venmo QR code
- Seller needs to bear Venmo seller fees equal to 1.90% of transaction amount + flat 10 cents
- Payment is covered via Venmo Buyer Protection
- Payment is reportable to IRS by Venmo as it is a business receipt – if the total of such Venmo receipts is equal to or more than $600 a year
How to do Friends and Family on Venmo
The default payment mode is Friends and Family on Venmo.
However, many time users inadvertently activate the goods and service mode, without realizing it. This ends up charging the recipient with the Venmo seller fees.
At the time of initiating a Venmo payment, you need to make sure you have the “Turn on for Purchases” option toggled off. This will make the goods and service mode inactive on Venmo.
So you have the option to tag each individual payment as either personal or for purchases i.e. goods and service.
Venmo Friends and Family Limits
With Venmo, you can make personal payments i.e. sending money to friends and family as well as commercial transactions i.e. paying for food at restaurants with Venmo, for gas or buying other goods and services from others via Venmo.
Venmo has a combined weekly spending limit of $299.99, if you have not completed identity verification. This limit includes person-to-person payments and payments to authorized merchants.
Once you complete identity verification, the limit jumps up to $60,000 per week. However, transactions may be declined for other reasons and there are separate limits if you are using the Venmo Card.
Venmo terms on Personal vs Commerical USage
As a seller, if you plan to use your Venmo account to receive payments for goods or services, you must ask your buyer to identify that their payment is for goods and services OR have a Venmo business profile.
Usually, the merchants that have a Venmo business profile will have a scannable QR code at their places.
A Personal Venmo accounts let you do things like:
- Make payments to friends.
- Transfer money for purchases of goods and services (by using the purchase tag)
- Buy things through an authorized merchant’s mobile website, app, or Venmo business profile.
- Buy, sell, and hold certain cryptocurrencies if eligible.
Here is extract of few important Venmo terms you need to be aware when using Venmo
We may also offer you the ability to set up a business profile within your personal Venmo account, which you can use to receive payments for the sale of goods and services. This feature is offered in our sole discretion and may not be available to all users.
Except for commercial transactions expressly authorized by Venmo, for example, transactions with authorized merchants or business profiles, purchases made using your Venmo Mastercard®,or transactions that are identified as payments for goods and services,personal accounts may not be used to conduct business, commercial or merchant transactions with other personal accounts, which includes paying or accepting payment from other personal accounts held by users you do not personally know for goods or services (for example, concert tickets, electronic equipment, sneakers, a watch, or other merchandise, deposits for apartments, or dog walking).
So hopefully this post has given you some insights on what is Venmo Friends and Family feature, when you can use it and how it is different from Venmo goods and services.