Venmo takes on Apple with its new credit card

PayPal’s Venmo allows users to send and receive funds through a smartphone app available through the Apple App Store and the Google Play Store. A Venmo subscriber can link his debit and bank accounts with the app to fund purchases or to transfer funds into a bank account. Venmo charges nothing for payments made using a Venmo balance, a bank account, a debit card, or a prepaid card. Receiving money and making purchases via another app is also free. Using Venmo with a credit card results in a 3% fee. And encryption is used to make sure that transactions are secure.

PayPal’s Venmo announces a brand new digital credit card for subscribers

Venmo, looking to capitalize on the success and popularity of its app, announced today a digital credit card. The card is rolling out to select customers starting today and offers up to 3% back on eligible purchases. All activity related to the card can be managed from the Venmo app including spending and rewards, split or shared purchases, statement payments made, and more. The Venmo card can be used everywhere Visa is accepted at both brick and mortar and online stores. The card is issued by Synchrony Financial. Venmo already offers a Mastercard branded debit card which should not be confused with the new credit card.

Purchases made using the Venmo card in a subscriber’s top-spend category returns 3% of the amount spent to the account holder. The subscriber will receive up to 2% of the amount spent on his second-largest category and 1% on all other purchases. There are different categories: Grocery, Bills & Utilities, Health & Beauty, Gas, Entertainment, Dining & Nightlife, Transportation, and Travel. As Venmo says, “What sets the Venmo Credit Card apart is that it maximizes the cash back you earn, automatically adjusting your top spend categories each statement period based on where you spend the most.” And users can also arrange for an alert to go off on their phones when purchases are made or cash back returns hit their accounts.

Even before account holders receive their physical card, they will be given a virtual card which allows them to shop online immediately. And the physical cards will be unique to each user thanks to a personal QR code that adorns the front of each physical Venmo card. Users can scan the code with their smartphone to activate the card, which is available in five different colorful designs. And with the Venmo card, account holders can make contactless payments in stores by tapping it on terminals that accept Visa’s contactless cards.

If the Venmo card is lost or stolen, a quick tap in the app will disable the physical card. When the card is back in the account holder’s hands, another tap in the app will enable the card.

Applying for the Venmo card can be done in the Venmo app. 5% to 15% of Venmo users will get the card this year with the remainder receiving it during the first quarter of 2021. There is no annual fee. Venmo Senior Vice President Darrell Esch says that the company is in talks with Apple to add support for Apple Pay on the iPhone.

Speaking of Apple, Venmo will be competing with the Apple credit card which was launched last year. While the latter returns to users 1% of purchases made using the physical card in situations where Apple Pay is not accepted, Venmo offers its cash back program (which we’ve already discussed earlier in this story) for both online purchases and those made using the physical card. Apple’s card, like Venmo’s, allows cardholders to manage their account via an app installed on their phones.