As the U.S. continues to adopt real time and faster payments, the question often is asked about how much to charge for the value that instant payments deliver. The current thinking is that consumers won’t pay for real time, meaning that most of the time they don’t see the value. The opportunity for suppliers of faster and real time payments to recoup the expenses of maintaining their services is through transaction fees charged to business users.
It is interesting then, that Venmo has just announced fee changes for their money movement services. In a disclosure update I received, Venmo announced that they are increasing the fee for instant transactions. This is the activity where a Venmo user wants to move money out of their Venmo account to another account through a debit push payment or the Clearing House RTP network:
Effective August 2, 2021, the fee for instant transfers will be 1.5% per instant transfer ($0.25 minimum fee, $15 maximum fee).
That’s an increase, up from 1% and a $10.00 maximum.
There was another fee introduced that is interesting. Here’s the description:
Effective July 20, 2021, users who receive payments that are identified by senders as for goods and services will be charged a seller transaction fee of 1.9% + $0.10.
I wonder what “identified by senders as for goods and services” entails and how it will be applied equitably. That part was not disclosed. Does that mean that Venmo will employ AI to sift through the transaction descriptions that senders create? So, if I send my roommate money for my half of the rent and comment, “here’s my rent payment”, will Venmo think that is a payment to a landlord and charge my roommate? If I buy a lawnmower from my neighbor and say, “thanks for selling me your lawnmower”, will they too be changed what amounts to merchant fees?
There is still more work to be done before market pricing settles in.
Overview provided by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group