Venmo, the peer-to-peer vending App of Paypal, in expanding its support for cryptocurrency, launched a new feature that allows its cardholders to automatically buy cryptocurrencies with the cashback earned on their Venmo credit card purchases. This announcement was made on Tuesday. The announcement details:
“Starting today, Cash Back to Crypto will be rolling out to Venmo Credit Cardholders, offering more ways to use cashback and expanding on Venmo’s crypto functionality, which launched earlier this year.”
These automatic purchases will have no transaction fees linked with them, according to Venmo this is not a promotion, but is how the system will work long term. In place of the transaction fee, a cryptocurrency conversion spread is built into each monthly transaction. This means that cardholders will be able to buy Bitcoin, Ethereum, Litecoin and Bitcoin Cash using the “Cash Back to Crypto” feature and without paying fees for the transaction.
Venmo’s New Launch
In April, Venmo announced that it would be launching a new feature that gives users the ability to buy, hold and sell cryptocurrency within the Venmo App as part of a larger investment in cryptocurrency led by its parent company PayPal. Partnering with Paxos Trust Company, a regulated provider of cryptocurrency products and services, Venmo’s more than 76 million customers can now access cryptocurrency within the Venmo app.
This new feature could help drive sign-ups for the Venmo Credit Card, by interlinking it with the cryptocurrency functionality. Venmo cardholders can now gain monthly cashback across eight several spending categories, with up to 3% back on their top eligible spending category, then 2% and 1% back on the second-highest and all other purchases, respectively. The top two categories are modified every month, based on where consumers spend the most.
Using Venmo Cash Back
To enable the new Cash Back to Crypto option, users will navigate to the Venmo Credit Card home screen, select the Rewards tab, select the ‘Get Started’ option. Users are to agree to the terms and then they will be able to select their crypto of choice and receive a confirmation note. Users can navigate to the Rewards tab at any time to turn the auto-purchase feature on or off, or even choose another crypto that they would like to trade that month.
Once enabled, when the cash-back funds hit the customer’s Venmo balance, the money is instantly used to make a crypto purchase. This new feature will not contain any transaction fees, as a cryptocurrency conversion spread is built into each monthly transaction, similar to how PayPal is handling Checkout with Crypto. The cryptocurrency is converted to fiat, but there are no transaction fees.
Cash Back to Crypto
The Cash Back to Crypto feature is a way for novices in cryptocurrency to join the market without worrying about how to purchase crypto. According to a study from PYMNTS and Bitpay, 3 out of 4 US customers lacked knowledge of the basic cryptocurrency trade. However, unless customers are regular and frequent with transactions using their Venmo Credit Card, these cash back-enabled crypto purchases might be in small amounts
Venmo has not disclosed details on how many Venmo credit cardholders are currently functional in the market. The PayPal CEO Dan Schulman only stated that the card “is outpacing our expectations for both new accounts and transactions.” This new feature began operation on Tuesday following Venmo’s announcement.