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FAQ: Venmo Chargebacks - YouTube
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presented by chargebackgurus.com
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venmo chargeback's 2020 merchant guide
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credit cards make it incredibly easy to
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make payments at online and in-person
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retailers
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but when it comes down to informal
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transactions between friends and family
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they're a non-starter with fewer people
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making a habit of carrying cash around
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peer-to-peer payment apps like venmo
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have stepped in to make it
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easy to make small electronic payments
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to individuals
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as venmo's popularity grows some
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merchants are starting to accept it as a
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form of payment
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but even venmo transactions can turn
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into chargebacks
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before leaping into the brave new world
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of p2p
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payments what do merchants need to know
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about venmo's
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chargebacks since its debut in 2009
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as an app designed to facilitate bill
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splitting and iou payments between
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acquaintances
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user base has grown to exceed 40 million
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people
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making it one of the most popular and
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widely used p2p
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payment platforms venmo is especially
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popular among younger demographics
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so many merchants who target those age
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groups see a clear benefit to including
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venmo as one of the payment
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options they accept merchants can always
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reach
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new customers by offering more diverse
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and varied payment options
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but with each new method comes new forms
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of frauds and chargebacks
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for merchants who have made the decision
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to accept venmo payments
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it's an imperative that they understand
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how fraud and chargebacks work on this
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platform and to mitigate these potential
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hazards
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how does venmo work venmo functions as a
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go-between for users who want to send
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payments to each other
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users can fund their venmo accounts with
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a bank account
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debit card or credit card they can then
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make payments to any other user on the
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platform
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ach and debit transactions are free but
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payments funded by credit cards carry a
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three percent fee
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payment recipients can transfer funds
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from their venmo account to their bank
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account
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venmo users can also obtain a venmo
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branded mastercard that works like any
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other debit card but draws funds from
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their linked venmo account
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instead of a traditional checking
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account this card can be used anywhere
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mastercard is accepted
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the merchant does not need to be set up
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to accept regular venmo payments
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however merchants can choose to accept
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cardless venmo payments if they have a
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payment
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processor that offers venmo integration
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such as paypal checkout by default
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venmo posts all transactions to a social
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feed that users can view
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while some users may understandably wish
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to opt out of this for privacy reasons
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it can serve as a little bit of free
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advertising for merchants
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are fraudsters using venmo the answer
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sadly is of course wherever money is
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changing hands
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fraudsters will be there attempting to
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snatch it away
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while there are some elaborate forms of
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venmo fraud that involve the fraudsters
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soliciting payments to their own account
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the most common type that merchants will
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encounter is a fraudster using stolen
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payment credentials to
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open up a venmo account the fraudster
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will then make purchases
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with the account until the money runs
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out or they are discovered
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this puts merchants in a difficult
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position because
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while venmo is responsible for
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authenticating the account and verifying
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the user's identity
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it is ultimately the merchant who will
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be out of the product and money
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when they receive a fraudulent venmo
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payment that
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ends up getting disputed how can
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venmo transactions become chargebacks
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there's no magic or special source to
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what venmo does
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like we said it's just a go-between it
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will deliver funds from your account to
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your friends account
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but behind the scenes you're making a
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normal electronic payment to venmo
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so they can deliver equivalent funds to
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the recipient
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download the e-guide for reasons to hire
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a chargeback management company
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bank account funded venmo transactions
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would be subject to the rules and
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limitations that govern ach
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transactions but transactions funded by
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credit cards can be disputed
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just like any other credit card
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transaction the user calls their bank
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says
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i never authorize this payment to venmo
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and the chargeback train starts rolling
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venmo suspends accounts that have
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chargebacks associated with them
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users must log in and make an ach
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payment to pay back the chargeback
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amount in order to get their account
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reinstated
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this helps to reduce venmo's chargebacks
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that will be categorized as friendly
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fraud
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but true fraudsters won't care about
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abandoning an account
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once it has served its purpose how can
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merchants protect themselves from
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venmo's chargebacks
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the rule for merchants is simple never
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accept payments from a customer via
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venmo's p
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to p payment system then most terms of
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service state that the platform is not
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to be used to pay for goods or services
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in this way
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and merchants have all the liability and
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no protections if they are defrauded by
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a p2p
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payment instead merchants must use the
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venmo checkout platform offered by its
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parent companies
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braintree and paypal by using venmo's
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merchant platforms
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you gain access to the fraud protection
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tools that the processor offers
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but many of these tools cvv verification
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for example
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will not apply to venmo app payments
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however
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methodologies such as risk scoring can
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potentially be applied to screen out
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venmo
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payments that mean that bear likely
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signs of fraud
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by screening out these transactions you
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can minimize your exposure to fraud and
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chargebacks over venmo
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of course with risk thresholds and
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similar methods
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you always run the risk of turning away
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legitimate customers
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which can defeat the purpose of
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expanding your payment options to
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include
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venmo in the first place the only way to
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strike an effective balance is to
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carefully monitor your transaction
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and charge back data identify the true
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sources of your chargebacks
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and adjust your strategies and
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thresholds accordingly
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conclusion it's always exciting when a
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payment platform that taps into an
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undeserved market
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rises to the fore for merchants these
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new payment schemes represent new
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markets new customers and
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increased revenues the thing you have to
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remember
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is that there's always risk involved and
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every new payment method brings
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new challenges to understand and
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overcome
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merchants should accept venmo if it
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makes sense for their business
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but knowing what to expect in term of
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chargebacks is
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vital when you understand what your
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liability is in various payment
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scenarios
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how the platform deals with disputes and
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what the data reveals about your own
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unique
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challenges you can put plans tools and
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procedures
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in place to manage disputes and prevent
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chargebacks from eating up
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your revenue to learn more visit
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chargebackgurus.com
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