To Venmo or Not to Venmo, with Your Students’ Payments: An Expert’s Advice

Jul 24, 2023 | News

By David Gould, Staff Editor

A quart of milk in a mini-mart doesn’t cost you much, and often there are long lines at checkout. Fast, “frictionless” payment in a setting like this is therefore much appreciated. That’s why TV ads for payment methods like Apple Pay show consumers in busy retail settings, spending small amounts of money.

Imagine a TV ad showing customers at the counter of a Park Avenue jeweler, all in a rush to pay for their $10,000 engagement rings—it wouldn’t happen. In that scenario, completing the transaction as quickly as possible is not even desirable.

When you’re selling goods or services that are relatively costly, payment is a serious thing. Mobile payment apps like Venmo, PayPal, Zelle, Google Pay and Apple Pay were designed to facilitate the least serious transactions in our entire economy—dinner checks and bar bills split among friends. In that regard, they solve one problem: failure of most people to carry sufficient cash. Golf coaches seldom receive cash for their lessons, so a student low on cash is a non-existent problem.

Nonetheless, golf coaches are very inclined to take money via mobile payment apps. Problems can arise with these apps, which has prompted Proponent Group to closely study the app usage patterns and stay abreast of changes to them. Because Venmo has 80 million users in the U.S., we’ll take the expedient route of letting Venmo stand for the category of apps generally. It’s fair to do so, given that the differences among the mobile payment apps are fairly minimal.

Proponent’s longtime affiliate and advisor, Niles Crum, points out that lax behavior on the part of Venmo users forced the creation of Venmo Business, a separate platform with its own regulations. “Venmo prohibits use of its personal Venmo solution for business payments, although many small businesses haven’t abided by this rule,” says Crum, president of the Texas credit card processing company Card Connect Tyler, a Proponent Group partner.

He provided a bullet list of what in his view are shortcomings of the Venmo app, as follows:

  • Funds from students’ accounts do not flow to the coach’s business checking account. They are held in a Venmo account, which makes getting access to your funds a bit of a hassle as you need to manually transfer the funds.
  • Funding is not as fast as having a traditional merchant account, which is typically next-day. If you want your funding instantly the cost is an additional 1.75 percent.
  • If you also have a personal Venmo account, the funding for your business and personal Venmo accounts are lumped together in the same account, creating an accounting headache.
  • If the student paying you doesn’t mark the payment private, their entire network sees the transaction, which is designed like a social network platform.
  • Fees, while less than a traditional merchant account, are quite expensive for what you get.  You, the merchant, will pay 1.9 percent plus 10 cents per transaction, merely for a transfer of funds between you and your student. 
  • Worse yet, if you ask your student to pay with Venmo and the student has their Venmo account linked to their credit card, the student will get hit with a 3 percent surcharge on your lesson fee. That makes a total of 4.9 percent plus 10 cents between you and your student, when a credit card is in play.The app does provide a handy verification service, which takes only a few seconds to run, but many users skip this step and accidently send money to the wrong person. 
  • Venmo does not work internationally.

Merchant account providers, like CardConnect, also offer mobile payment applications/solutions for your business and are experts in business payment solutions. 

So, you can have the convenience of a mobile payment solution, along with the full-service support of a dedicated representative, robust reporting tools, next-day funding directly into your business checking account, integration into the USchedule lesson software and a robust dynamic platform with that includes an hosted payment page, and more all with a single merchant account. Something to consider.