PayPal and Venmo will both increase fees on instant transactions in Q2
Paying for convenience can add up as Americans spend on average more than $300 per year on various bank and transfer fees.
Now, and sadly for many, PayPal (PYPL) and its subsidiary Venmo have just announced that they will increase their instant transfer fees this spring.
How much will I have to pay for this transfer now?
On PayPal, personal accounts will be charged 1.75% of each instant transfer with a minimum fee of 25 cents and a maximum fee of $25. Previously, the transfer fee was 1.5% and capped at $15.
While the percentage for PayPal business accounts remains unchanged at 1.5%, the company is getting rid of the $15 maximum cap entirely.
For those making particularly large transfers, this will certainly be felt.
Venmo, who was purchased by PayPal in 2013, increases its transfer fees from 1.5% to 1.75% for personal and business accounts.
The maximum fee will also increase from $15 to $25.
The rationale for the increases, according to PayPal, is standard corporate talk of being “more in line with the value we provide.”
That said, the standard transfer which takes between 1 and 3 days remains free.
“We offer options such as instant transfer, so customers can choose to transfer their money instantly to a bank account or debit card for a fee, as well as standard bank transfers, so customers who may be waiting a few days can transfer their money free of charge, which will usually arrive within 1-3 business days,” PayPal said in the Publish announcing increases.
The changes go into effect May 23 on Venmo and June 17 on PayPal.
Instant Cash app or bank transfer?
Transferring money from a bank account is an expensive business.
An overview made by ValuePenguin found that, of the 11 largest banks in the country, it costs an average of $13.88 to receive a transfer and $28.13 to send a transfer in the country.
Internationally, that number goes up to $50.
Some banks, such as Capital One and Chase (JPM)entice users by offering $0 fees for the most basic domestic transfer types.
But for those who need to transfer money frequently, there is no escaping these fees if they use banks, as they will start to add up as different services are added. required.
Largely due to high fees and long waiting times imposed by banks, instant transfer platforms have begun to carve out a rapidly growing customer base.
While PayPal and Venmo are early movers in this space, newcomers like Ofx and Square’s Cash App have seen growing popularity.
While once touted as a less secure option than banking, the ubiquity of instant transfer apps has put that question to rest, as many forgo bank transfers entirely for smaller amounts or use another method, such as cryptocurrency.
“A lot of people are unbanked by choice,” Bankrate Principal Analyst Ted Rossman said recently CNBC. “Maybe they don’t trust banks or are in a banking wilderness, but if you put all your eggs in one basket, it can hold you back in the long run.”
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This story was originally published April 21, 2022 12:59 p.m.