You’re probably here because some Board Member (possibly you) had the bright idea to collect dues through Venmo because somehow it’s magically FREEEEEE!!! Meaning there aren’t any fees associated to sending or receiving money (like there is with Paypal). It’s a utopia of transactions. So why aren’t businesses using it for EVERYTHING!?
Paypal owns Venmo (twist!)
And they didn’t buy Venmo to cannibalize their core business. Keep in mind, Paypal already had a free way for friends and family to send money to each other for free when they bought Venmo, but their way wasn’t as “social”.
And that’s what Venmo is: a Social Commerce Platform. Their words not mine.
Venmo is a vapor-trail of money
My actual transaction data for what was paid for. Note one row was just empty. Imagine sending this to the IRS.
I’ve heard from neighbors that pay their after-school help through Venmo that couldn’t prove it at the end of the year for their Tax returns. I found this hard to believe, so I went back through my own Venmo transaction history.
Logging in through their website I was only able to get 90 days of my transaction history to export out to CSV. Aside from not having a full year’s worth of data (or multiple years in case of an IRS audit), Venmo leaves it up to the sender to categorize what was actually paid for. So expect to see a lot of Swim Emoji icons for everything from Family memberships to concessions when members pay. If you are reading this as your club’s accountant, you should be feeling queasy right now.
Venmo does have fees
Thought Venmo was totally free. They do have fees. So for example, if a Member funds their transaction with a credit card, they get stuck paying 3%. That’ll likely never come up for small purchase items, but it will for the larger membership payments. So what will likely happen is members will try to create their own installment plans based on what is currently in their Venmo account.
“Yo, I only paid $90 because thats what I had in my account, I’ll send more when this guy on NextDoor buys my kid’s old bike.”
This will happen because people treat Venmo like Venmo. It’s fun-bucks for most people. But by introducing play-money into your otherwise serious revenue stream, you’ve now given members a reason to treat the club like their bro, “Dude, just let me swim this weekend and I’ll get ya those dues later”.
Venmo is literally telling you to get off their website
If you’ve ever used Venmo, you already know its deeply tied to your mobile phone. For fun, try deleting the app and reinstalling it. Unlike most apps you won’t be asked to log back in. Venmo is that sticky. It’s like you never deleted it.
They really don’t want users relying on their website for much of anything. At the time of this article, the picture below was front and center when I logged in…
This is another bad sign for anyone that wants to treat Venmo seriously as a revenue-collecting tool. Imagine on-boarding a new Treasurer and explaining to them their phone now gets to be the lucky device with the club’s Venmo account installed. Just hope they weren’t planning on using their own Venmo account for a few years.
This is how clubs lose their non-profit status
Digging through a box of old Board Member documents recently, I discovered my home club had temporarily lost their non-profit status due to a rather minor accounting mistake. So if you’re sweating 2.2% in Paypal fees, imagine having to pay taxes as a for-profit business.
If the IRS lines up 5 clubs in a row, and has their choice of one to audit, and 4 of them have bullet-proof accounting records via a single source of money received, and 1 of them is taking in dues all over the place: Venmo, Paypal, checks, cash, etc, guess who get this audit.
The first thing the IRS will want to check is money going back out the same way it came in. Refunds via Paypal are pretty straight forward. The transaction can simply be refunded, and there’s a clear paper trail linking the original order and the refund.
Imagine what a refund would look like in Venmo. It would look like the club is paying money back out to members.
Mixing in a social commerce app into the revenue stream of any business pulling in hundreds of thousands is going to be a red flag.
It’s so easy to do things right…