This week, Pay Pal announced a new way for its users to move funds stored on its Venmo app to their checking account. Consumers today have that option by entering their debit card number. When they choose the debit card route, funds are moved through the global networks as a debit push payment to the individual’s checking account.
This new option will have the individual input their checking account details and the transaction will route through The Clearing House’s RTP network one of the most visible applications of the new real-time network. This is functioning through PayPal’s partnership with JP Morgan Chase. As with the debit card option, there is a fee; 1% of the value sent with a $10 cap. Here’s what TechCrunch reported:
PayPal owned payments app Venmo today announced support for instant transfers to U.S. bank accounts. The feature is an optional alternative to Venmo’s standard bank transfer service, which typically takes one to three business days to process transactions. With Instant Transfer, however, funds from your Venmo account can hit your bank account within minutes.
As of January 2018, Venmo has offered Instant Transfers to eligible Visa and Mastercard debit cards for a small fee. At launch, the fee was a flat $0.25, but Venmo bumped it up to 1% of the transferred amount last October. Now, the minimum fee is $0.25 and the maximum fee is $10. Of course, users can still choose the standard transfer option if they don’t want to pay for the convenience of instant payments.
In an email, Pay Pal commented that it added this option to give consumers without a debit card instant transfer options. That’s a pretty slim number of customers, but making sure product features are available to all is a worthwhile endeavor and part of an overall initiative to monetize Venmo transactions.
RTP reaches over 50% of checking accounts today. I am not sure what happens when a transfer is made to a bank that does not receive RTP transactions. I will have to do some investigating and report back.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
