Venmo Allows Credit Cardholders to Buy Crypto Using Cashback

Venmo is expanding its support for digital currencies, as its latest offering allows its credit cardholders to buy crypto using the cashback received from other purchases. Users can now convert cashback earnings from regular Venmo credit card purchases into automated crypto purchases. 

The mobile payment app further stated that these automated purchases will not have any attached transaction fees. The PayPal-owned mobile payment service announced that the absence of transaction fees is a permanent system fixture and not a promotional one. Instead, Venmo states that a crypto conversion spread will work into each monthly transaction. The new app feature allows users to buy Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Starting today, all Venmo Credit Cardholders will have access.

Using Credit Cards with Crypto

Venmo believes that by syncing its cashback feature with crypto functionality, there will be an increase in demand for its credit cards. There are eight different spending categories on offering through which cardholders can earn monthly cashback. The top available spending category gets a 3% cashback and 2% for the second highest. All other categories get 1%. Venmo states that where consumers spend the most in terms of monthly adjustments, influences the top two categories.

The payment app sees the cashback feature as a way for crypto newcomers to familiarize themselves with the world of digital currencies. In addition, the extra benefit is that these people will not have to worry about the technicalities of buying crypto. Because Venmo has automated the entire process, users could forget they are buying crypto while paying for goods and services. However, Venmo points out that many of these automated crypto purchases will be relatively small if users do not use their cards enough. The payment service providers say increased usage of credit cards will also drive up the cashback crypto purchases.

Venmo is yet to report how many of its credit cardholders are currently active in the market. However, Dan Schulman, CEO of parent company PayPal, said in a Q1 report that the card “is outpacing our expectations for both new accounts and transactions.” Schulman also reported strong crypto engagement on Venmo for the last quarter.

In April, Venmo was part of a larger investment led by PayPal that granted customers access to trading cryptocurrencies. Through a partnership with Paxos Trust Company, 70 million users can now directly access digital currencies.

How the Venmo Crypto Cashback Application Works

The operational process for accessing the cashback feature on Venmo is straightforward. Customers go to the app’s home screen, then select ‘Get Started’ under the Rewards tab. After agreeing to terms, they will choose the crypto of their choice and confirm the selection. Upon enablement, any cashback funds entering the customer’s Venmo balance automatically reroutes to make a crypto purchase. According to the company, users can choose whether to turn the feature on or off at any time.

In a statement, Venmo SVP and GM, Darrell Esch, enthused about the cashback feature’s possibilities. 

“We’re excited to bring this new level of feature interconnectivity on the Venmo platform, linking our Venmo Credit Card and crypto experiences to provide another way for our customers to spend and manage their money with Venmo,” said Esch.

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.