If you have wondered “Can I use Venmo for business?” or “How can I accept money in my business, BUT avoid processing fees?” This blog post and podcast are for you! I’m diving into the question of payment processors. Which payment processor should I use? Is there one that won’t give me transaction fees? Can’t I just use Venmo or Cash app instead? This is kinda a soapbox of mine, and if you’ve been listening to the podcast for a while you’ve heard me talk about this in other episodes.
I think it’s such an important topic and one that I WISH someone would have told me when I was a new business owner. You see… I made this mistake, and have some stories to tell from it! And, I want you to learn from my early business owner mistakes!
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In Facebook groups, I often see this type of question: “Does anyone have a good recommendation to get around not paying fees for receiving money? I know it's the cost of doing business and is more convenient for clients, but I hate the fees! Thanks!” And, it’s a problem!
If you’re asking, “Is it okay to use Venmo for business?”, the answer is no! Oftentimes new business owners only accept payments via Venmo, Cash App, PayPal.me, or checks in the mail. All of these are ways to avoid the 2.8% - 3% processing fee. People do this to save a little cash.
When you allow people to pay you online through their own payment choice, the payment platform takes a very small percentage of the total. These fees happen with any normal online payments — debit card, credit card, and bank payments all take a fee.
Here’s the thing though… payment processing companies are businesses, just like you are. In order to operate, they have to make money. Instead of charging you a monthly flat fee for using their service, they take a small percentage of what you earn. Instead of whining about the percentage, be a business owner, and set your pricing to where you aren’t “hurt” by the fees.
I can speak bluntly about this because I have been there! When I was a new business owner, I took payments only on Venmo, Cash App, or checks in the mail. And, it wasn’t cool of me! It cost me more time. Plus, when I was earning less money, I was really only saving $10 or less per transaction. The $10 was not worth the hassle on me or my customers.
Here’s why using those apps to save a little cash was a mistake:
1. I was creating every invoice in Adobe Illustrator from a template I made.
This is because I wasn’t using a legit payment platform. I did this EVERY TIME. This was not very efficient for creating invoices or remembering due dates.
2. My clients probably hated it (and yours probably do too) because it’s less convenient.
Plus, it might be costing them potential rewards from their credit card companies and the peace of having well-tracked payments.
When I’ve paid contractors who use Venmo for business, it has to come out of my personal checking account. Apps like Venmo and Cash App only allow one bank account from each banking institute. (Both my personal and business accounts are at the same bank.)
So, as a buyer, I have to go find that Venmo cost and transfer money from my business account to my personal finances to cover it. Then, I have to remember to categorize that specific transfer as a contractor payment in QuickBooks. It’s more challenging. Your clients don’t like it.
3. You’re making your clients miss out on the convenience of paying how they want to.
I’m very big on using a credit card in my business to put all my expenses on, and then I pay it off at the end of the month. ALWAYS pay it off. I know most of my clients have the same preference. When I get to put expenses on a credit card, I get more rewards points which equals savings on travel or actual cash back depending on the card. I get actually excited about big expenses sometimes BECAUSE OF THIS. I’m like YAY more points, more cash! When you don’t let people use cards you make them miss out on these bonuses and conveniences. (Here’s a link to the Spark credit card by Capital One that I LOVE!)
4. The big reason: You might get penalized for it.
I actually got kicked off Cash App early on in my business and got in trouble with Venmo. The two companies realized I was using their app for business and kicked me off. It’s against their policy because when it’s a business expense you SHOULD pay for processing. Since those companies are meant for friend to friend transactions, they don’t have a processing fee. So, don’t risk getting kicked off over saving a few dollars! START NOW with professional payment systems and don’t use Venmo for business.
So, what payment processors should you use?
First of all a payment platform and an invoicing company are different things. So, you can use something like Dubsado for example and accept payments through different payment platforms — like Stripe, Square or PayPal. But, Dubsado is the invoicing system you’re using.
Here are invoicing systems I’d recommend:
If you want something easy and free, I recommend Wave. Wave is an invoicing system. You can create and send invoices from the platform, send automated reminders, and more. The invoicing is free, but just like everything else, payment processing is NOT. (Which remember we are ok with, because we are being CEOs not hobbyists!)
For something more robust, I recommend Dubsado. It’s so much more than invoicing. It does contracts, questionnaires, emailing, calendar management, and more. You can use “ELIZABETH30” to get 30% off your first month or year. And go to episode #18 to learn about Dubsado more. With Dubsado, you can accept digital checks, Stripe, Square, and PayPal payments. I used Wave when I was a new business owner, and then switched to Dubsado when I wanted more features.
For online shops: Shopify, Shopify Lite, ThriveCart are great! If you have a course or membership site, use the payment processor that comes with it. As far as what processor to use, in my shop and in my 1:1 work, I get a lot of payments via Stripe and PayPal. I love both. Both take an almost equal fee. You can also accept payments via digital check, which is the lowest cost option and is typically a flat $5.
But, what if I still really NEED to avoid payment processing fees?
Switch to one of these platforms I’m recommending. Be a professional business owner. You’ll save time and create a better experience for your customers. You can consider asking clients to pay via check (digital or mail) and tell them WHY — that it saves you hundreds in fees.
I used to request checks, but have since stopped. But, I always appreciate it when a client pays with a check! But again, I have decided not to push it and I let people pay however they want. Factor the fees into the cost.
You’ll set yourself up to succeed more in the long run if you don’t use Venmo for business. Instead, start being more professional with your payments and invoicing now. I know early on, avoiding the $10 fee can feel HUGE. You don’t want to pay the $10. But, trust me, once you accept the fees for what they are and work them into your costs of doing business, you’ll feel better and your clients will appreciate it!
Don’t charge your customers extra for using credit cards. I’ve seen this suggested and again, it’s unprofessional on your end. They should be allowed to pay how they want.
Also, you can write these fees off on your taxes. They are tax-deductible. I write mine off as miscellaneous and categorize them as “credit card processing fees.'' This reduces the amount of taxes I have to pay, which is great! So you don’t need to use Venmo for business anyway!