Venmo Lets Credit Cardholders to Convert Cash Back to Cryptocurrency

Venmo mobile payment service announced on Tuesday, August 10, that it has launched a credit card feature that allows users to convert their cash-back rewards into Bitcoin and other crypto-assets. 

Brazil. In this photo illustration the Venmo

The PayPal Inc-owned company has announced that it has expanded its crypto offerings.

This new “Cash Back to Crypto” feature enables Venmo credit cardholders to use monthly cashback in their accounts to buy crypto of their choice without incurring transaction fees automatically.

Darrell Esch, “head of checkout” at PayPal, and a general manager at Venmo, talked about the development, saying:

“Starting today, Cash Back to Crypto will be rolling out to Venmo Credit Cardholders, offering more ways to use cashback and provide another way for our customers to spend and manage their money with Venmo.”

Venmo’s “Cash Back to Crypto” feature will enable consumers to choose between Bitcoin, Ethereum, Bitcoin Cash, and Litecoin; the four crypto assets are currently available on the Venmo app. 

The “Cash Back to Crypto Feature” is free of charge, unlike Venmo’s normal fees for crypto purchases that can range between $0.5 to 2.3% of the transaction amount.  

Once the purchase is executed, customers will be able to either hold their cryptocurrency or sell it on the Venmo app. The feature does not support transfers to external wallets.

Crypto Going Mainstream

A few months ago, Venmo made a bold step toward providing investors with mainstream access to cryptocurrencies.

In April this year, Venmo launched its cryptocurrency trading service as a new way for its more than 70 million customers to purchase, sell, and hold crypto assets directly within the Venmo app.

Venmo users can buy crypto assets using money already in their accounts or money inside linked bank accounts. 

Venmo rolled its crypto service after finding out that 30% of its 70 million customers have already begun purchasing cryptocurrency or equities, with several of them starting when the Covid-19 pandemic hit the world. Customers can buy cryptocurrencies for as little as $1.

Image source: Shutterstock


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Venmo Is Letting Users Convert Cash-Back To Bitcoin For Free

The payments app has launched a new feature for its credit card offering that allows users to convert cash-back rewards into BTC for free.

CNBC reported that the popular payments app Venmo launched a credit card feature Tuesday to allow users to convert their cash-back rewards into bitcoin – free from transaction fees. Although not a proper bitcoin rewards system, Venmo provides interested users the option to have a buy order automatically executed upon receipt of any cash-back in their accounts. However, there are no signs of a bitcoin withdraw option being added to the app.

The new feature is not bitcoin-back but gives users an alternative to regular buying. Venmo charges its users a minimum of 50 cents for bitcoin purchases under $25 and a 2.3% fee from $25 to $100. The payments app charges a 2% fee for transactions between $100 and $200; 1.8% for orders between $200 and $1000; and 1.5% for all those above $1,000. But converting cash-back into bitcoin or other cryptocurrencies will be fee-free.

The development aligns with the broader strategy of Venmo’s parent company PayPal. The online payments giant is moving fast to capitalize on the growing adoption of bitcoin, seeking to reap revenue by charging conversion fees. This is further demonstrated by both companies’ policy of not allowing users to withdraw bitcoin – meaning, those who buy have to one day sell.

As Venmo and PayPal bring users to bitcoin but not the Bitcoin network, much is lost in sovereignty and decentralization – two central pillars of the peer-to-peer system. By denying individual sovereignty to their users, both companies affect two results that cancel each other out.

Yes, every time Venmo takes a step towards facilitating access to BTC, the company helps increase bitcoin adoption through its over 70 million users. However, as it keeps preventing those users from taking control of their funds, the payments app undermines both the adoption and the network. Without owning the private keys that can spend their bitcoin, Venmo and PayPal users alike would effectively own IOUs instead of actual BTC.


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The Incentives Of Bitcoin Rewards Rise With The Price

Humans are driven by incentives. For years, businesses have attracted new users and encouraged customer loyalty using fiat-denominated incentives. These rewards come in many forms: cash bonuses, points, air travel miles, purchase matches, product discounts, low introductory interest rates, and everything in between. In addition to offering this “value,” companies spend millions of dollars spamming the general public with TV and radio advertising and endless junk mail. Although it is marketed as a way to prioritize the customer, this impersonal “spray and pray” approach feels more like fishing for suckers. I’ve literally received 5+ credit card offers in my dog’s name. My dog is really excited for such an exclusive, pre-approved opportunity. He really is.

Fiat-denominated rewards align perfectly with the fiat system. 

Your points will expire in 1 year—hurry up and use them! We’ve revised our tiered program, and achieving “diamond” status next year will be a little bit harder, even though the value of those rewards will be diluted. Sorry, you actually can’t redeem points at those destinations you wanted to visit. Spend your value now and work harder just to keep pace tomorrow. You’ll love it! 


Enter Bitcoin.

The bitcoin rewards scene is comparatively new but objectively better than everything mentioned above. The Bitcoin-focused companies that have had initial success share some common traits: they engage with the community, they iterate on their products in ways that continue to provide value to their customer base, and they respond to feedback by actually taking action. These things sound easy on paper, as most bitcoin concepts do, but execution is much more difficult. Bitcoiners are some of the hardest customers to please because we demand quality products that are built the right way. The companies in this space that will win are those that build their businesses accordingly.

I will share a bit about my personal experience and a friend’s success in doing business with these companies. I was an early adopter of Lolli and Fold (not shilling, do your own research) and am still a happy customer of both. In my business ventures, I generally spend a good amount. Traditionally, I’ve used credit cards that give 1%–1.5% cash back. I used to let the cash back pile up and then go spend it on something unnecessary. That was very fiat of me! As is traditional after diving down the Bitcoin rabbit hole, I ended up allocating a very (ir)responsible percentage of my net worth to accumulating bitcoin as quickly as possible. Once I saw the light, I knew I was buying at fire sale prices, but I only have so much money—I’m not a central bank, so I needed to figure out other ways to accumulate.

Although I did work out a couple of ways to earn some bitcoin, I was regularly looking for ways to accumulate it passively throughout the course of my current lifestyle. I wanted that 1%–1.5% kickback to be in bitcoin. Not only would that provide an incentive for me to stack the hardest money in the world, it would also give me extra reason to grow my spend (not consumption) and therefore my business volume. When these rewards products came to market, I jumped on them immediately, and I found myself with a fire lit under my ass trying to add value to the world as quickly as possible while also drastically reducing my frivolous spending. Value went up, and garbage went down. It’s funny how (the right) incentives work. Although my overall reward accumulation rate has slowed down because of bitcoin’s price appreciation, it feels validating to watch things work out as they should. Not to mention that the reduced rewards I’m earning today will look incredible in due time. As of today, I’ve earned over 150 million satoshis in rewards, and I still look forward to “spinning the wheel” for a few more every day.

When I have shared my experience with others, I have often heard that, because of my business, I was lucky to be in the position where I could spend more than any ordinary consumer would have. Enter my aforementioned friend. Let’s call him Chad. Chad found himself out of a job because of some recent health events you may have seen in the news. “Lucky” Chad didn’t want to wait for handouts, so he decided to make something out of nothing. He recognized that contractors were extremely busy fixing all of the houses inside which people were stuck for weeks on end. He cold-called contractors and offered to handle material orders and deliveries for a flat fee of $100 per job. Most people couldn’t be bothered to hustle for $100, but Chad quickly found himself handling well over a dozen jobs every week. In addition to that, Chad was using his Fold card to get bitcoin rewards on most of those material purchases, which were being reimbursed with other people’s money. Chad has since been hired by one of these contractors to be a project manager with a salary 50% higher than any job he’s had previously. Easy game.

The rewards industry is huge, and I expect to see a ton of growth in this area over the coming years. Companies will be forced out of their fiat mindsets and will have to realign with bitcoin incentives to remain competitive. I’ve stacked, dollar cost averaged, performed personal speculative attacks, earned, and been rewarded in bitcoin. This is a game of accumulation, and I’m here to play. If you want my business, come get it.

– Relevant P

This is a guest post by Relevant Peter Schiff. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.


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