Venmo Now Lets You Buy Crypto with Credit Card Cash Back

Venmo Integrates Crypto Purchases with Cash Back Rewards

Venmo, a subsidiary of PayPal, is broadening its cryptocurrency offerings with a new functionality. This feature enables users to automatically acquire cryptocurrency utilizing the cash back rewards they accumulate from their Venmo credit card transactions.

Unlike direct cryptocurrency purchases, these automated acquisitions will incur no transaction fees – a policy Venmo asserts is a permanent aspect of the system, not a temporary promotion. A cryptocurrency conversion spread is integrated into each monthly transaction instead.

Supported Cryptocurrencies

Venmo cardholders will have the ability to purchase Bitcoin, Ethereum, Litecoin, and Bitcoin Cash through the newly introduced “Cash Back to Crypto” option, which is currently being deployed to the Venmo application.

Venmo initially launched the capability for users to buy, hold, and sell cryptocurrency in April of this year. This move was part of a broader investment in cryptocurrency spearheaded by its parent company, PayPal.

Through a partnership with Paxos Trust Company, a regulated cryptocurrency products and services provider, Venmo’s extensive user base of over 76 million individuals now has access to cryptocurrency directly within the Venmo app.

Driving Credit Card Adoption

The cash-back feature is strategically designed to encourage sign-ups for the Venmo Credit Card. It achieves this by linking the card directly with the cryptocurrency functionality.

Currently, Venmo cardholders receive monthly cash back across eight distinct spending categories. Rewards are tiered, offering up to 3% back on the highest eligible spending category, 2% on the second highest, and 1% on all other purchases.

The top two spending categories are dynamically adjusted each month, reflecting current consumer spending patterns.

How to Enable Cash Back to Crypto

To activate Cash Back to Crypto, Venmo users will navigate to the Venmo Credit Card home screen within the app. They will then select the “Rewards” tab and choose “Get Started.”

Users will be prompted to accept the terms, select their preferred cryptocurrency, and confirm their choice. Once activated, cash-back funds deposited into the user’s Venmo balance will be automatically used to purchase the selected cryptocurrency, requiring no further action from the user.

No Transaction Fees

This feature will not impose any transaction fees. Instead, a cryptocurrency conversion spread is incorporated into each monthly transaction. This approach mirrors PayPal’s “Checkout with Crypto” functionality, which allows online shoppers to utilize cryptocurrency for purchases.

In this system, cryptocurrency is converted to fiat currency, but no transaction fees are applied.

Venmo also notes that the feature can be easily enabled or disabled at any time.

Simplifying Crypto Entry

Venmo positions Cash Back to Crypto as a means for individuals new to cryptocurrency to enter the market without the complexities typically associated with crypto purchases. It’s designed to be a “set-it-and-forget-it” type of feature.

However, the size of these cash back-enabled crypto purchases will likely be modest unless users consistently and frequently utilize their Venmo Credit Card.

Venmo Credit Card Performance

The company has not yet disclosed the number of active Venmo credit card holders participating in the cryptocurrency market.

PayPal CEO Dan Schulman reported during the Q1 earnings call that the card “is outpacing our expectations for both new accounts and transactions.” He also noted “strong adoption and trading of crypto on Venmo” during the past quarter.

Venmo’s Statement

“The introduction of the Cash Back to Crypto feature for the Venmo Credit Card offers customers a new way to start exploring the world of crypto, using their cash back earned each month to automatically and seamlessly purchase one of four cryptocurrencies on Venmo,” stated Darrell Esch, SVP and GM at Venmo.

He further added, “We’re excited to bring this new level of feature interconnectivity on the Venmo platform, linking our Venmo Credit Card and crypto experiences to provide another way for our customers to spend and manage their money with Venmo.”

The new option is beginning its rollout to Venmo Credit Card holders today.