Accepting customer payments through Venmo or Cash App
Updated June 2022
A few years ago, I was asked the following question by a group of bright-eyed and bushy-tailed entrepreneurs:
Can my business accept payments through my personal Venmo or Cash App account?
My unfortunate answer was, “No, I wouldn’t.”
The original reason I gave this answer was because of the User Agreement and Terms of Service for both Venmo and Cash App – because I’m sure you read through all 25+ pages of both agreements before you checked the box to open your personal account! And because of my personal experience of Cash App freezing my account.
• • •
Let me back up for a moment and explain what Venmo and Cash App traditionally are to those who aren’t familiar: They are both services that provide peer-to-peer electronic money transfers.
Say, you and your friends go out to eat, and the restaurant doesn’t provide split checks. You throw it all on your credit card (because you earn points – cha-ching!) and your friends offer to pay you back … but they don’t carry any cash. Here’s where these services come in – you can either send each friend a request for their portion of the bill, or they can send a payment directly!
Easy + Convenient!
Examples can be said about basically anything where you owe a friend cash for something (utilities, lunch, gas, etc.)
But that’s the thing … these are peer-to-peer, friend-to-friend.
But what about for businesses?
When you sign up for an account with Venmo…
you agree to the User Agreement (last updated May 2022 at the time of this update).
We offer accounts for two types of purposes: personal accounts and approved business accounts. … Your Venmo account is a personal account unless you have received our express written approval to open a business account.
That means your Venmo account will automatically be treated for peer-to-peer transactions – not for accepting payment for the goods or services of your business, unless you sign up for a specific business account.
Need to pay someone for subcontracted work they performed for your business?
Set up a Business Venmo account.
If Venmo or Cash App look over your account and determine that you are breaching the agreements, they can reverse the transactions and freeze your account (also stated in the User Agreement). That could mean that both of you are out the cash.
The Terms of Service for Cash App are pretty similar.
The Terms of Service (last updated June 2022 at the time of this update) state under part VII. Peer to Peer Service, 1. Description Of Service
The peer-to-peer Service (“Peer-to-Peer Service”) allows you to send funds or receive funds for peer-to-peer personal, non-commercial purposes.
and under part VII. Cash for Business, 1. Transaction Processing for Cash for Business Sellers, it states
If you are a seller of goods or services, your profile will be marked with an official insignia or will otherwise be designated as having a “Cash for Business Account.” You must have an Unrestricted Account to be a Cash for Business Seller.
For both of these services, you can open up authorized business accounts for your business.
The key here is that this is a separate account set up as a business, not your personal account.
So while my short answer in the beginning was “no,” it was because the question was in regards to accepting payment in a personal Venmo or Cash App account.
If paying through Venmo or Cash App is the preference for your clientele, then follow through the steps to set up a business account with these services. One difference will be that the payments you receive will be charged a standard 2-3% fee, just like any other merchant service for business (PayPal, Square, Stripe, Clover, QB, etc.).
Connecting Venmo to QuickBooks Online
There is now an integration to connect your Venmo account to QuickBooks Online Banking downloads for your business if you do decide to use Venmo for accepting or making payments.
What this connection does is set up a new “bank account” in your QuickBooks Online account. This would be accurate as Venmo is essentially a digital bank account that can carry a balance.
The integration isn’t perfect, but it’s a start to automating some of the transactions in your account.
Here is an example of a downloaded transaction where money was sent. Only the “What’s it for?” in the Venmo app is downloaded into QBO and is shown under the “Bank Detail” section. Who the payment was made to isn’t downloaded.
The other thing that it doesn’t show is whether the payment was made from your Venmo balance or you used funds from your checking account. If you used funds from your checking account, a corresponding money received transaction isn’t downloaded (like the way it is downloaded for PayPal accounts). You would need to look at Venmo for this information.
So, while it’s somewhat helpful to have this integration, it doesn’t do the full job in order to properly record all of your transactions and reconcile your books. You’ll have to manually add information and transactions in order to be reconciled.
If you’re already using QuickBooks Online for your business, have you given any thought to QuickBooks Payments?
Fully integrated with your QBO, the system automatically takes care of receiving the payment and entering the Deposit into your Checking account in the system! They offer competitive rates to other merchant services and are easy to use. Let me know if you would like to get QuickBooks Payments set up in your QBO!
No assurance is given that the information is comprehensive in its coverage or that it’s suitable in dealing with each individual’s particular situation. Kayla Prusinski does not hold a Certified Public Accountant (CPA) or similar license. This blog article is to provide general information only, does not constitute tax or legal advice, and cannot be used or substituted for tax or legal advice. Savvy Bird Consulting, LLC is not responsible for the implementation or outcomes this material may have.