The feature ... can be used to cash printed, payroll and U.S. government checks, including the new stimulus checks, the company says. Though typically there will be fees associated with the Cash a Check feature, Venmo says these are being waived on stimulus funds for a limited time.
To be eligible to use Cash a Check, Venmo customers will need to have either Direct Deposit or a Venmo Debit Card enabled on their account, location services turned on, and a verified email address.
It works much like the portable apps currently offered by major banks: Customers take a picture of their endorsed check and send it to the Venmo app to review, which takes a few seconds (though in certain circumstances the review can take several minutes or even up to an hour before approval).
If and when it is approved, the money is immediately transferred to the customer’s Venmo account.
Unlike most banking apps, where the deposit is free, Venmo will charge a 1% fees for any government or payroll check cashed in the app with a pre-printed signature, with a minimum fee of $5.00. PayPal’s terms state that other checks -- including hand-signed payroll and government checks -- will carry a 5% check-cashing fee, or $5.00 minimum. Venmo will temporarily waive fees on stimulus checks as they roll out over the next couple of weeks.
“We’re always looking for new ways to make it easier for our community to access and manage their money, especially as people continue to experience financial hardships amidst the global pandemic,” said Darrell Esch, Venmo SVP and GM, in a statement about the new service.
Make no mistake, Venmo sees a profitable future with checks. TechCrunch.com notes that he stimulus funds can and will help boost Venmo’s bottom line beyond just the fees it charges.
As Venmo users gain access to their stimulus payments or payroll in the app, they may then use that money to make transactions with online merchants or with their Venmo debit card. This transactions allow Venmo to make money through transaction fees, as well.
The "Cash a Check" offering from Venmo reiterates the importance of check as a payment method. While most banks and credit unions have a leg up on Venmo with a mobile RDC feature already available on most banking apps, it does present additional competition for a feature that Forbes.com recognizes for its critical, ongoing importance according to their respondents -- be on the lookout for more on this research in a featured blog! Banks and credit unions must continue their investment in check technology to automate processing to ensure a smooth and consistent customer experience.