Venmo’s support for the crypto sector has solidified with the launch of a new feature that will allow users to automatically purchase cryptocurrency using cash back earned from Venmo credit card purchases.
Venmo, owned by PayPal Holdings Inc, is thus expanding its cryptocurrency offerings just months after allowing digital assets to be used on its platform.
Cardholders will be able to purchase Bitcoin, Ethereum, Litecoin and Bitcoin Cash through the “Cash Back to Crypto” feature accessible directly from the Venmo app.
This initiative is part of PayPal’s broader crypto strategy: the company launched a dedicated cryptocurrency unit earlier this year after introducing digital currency trading to its more than 70 million users last fall.
This latest step offers the opportunity to increase the use of crypto and consequently, the number of holders of digital assets.
Venmo’s commission-free cashback in crypto
Cryptocurrency purchases made using this option will have no transaction fees, but there will be a cryptocurrency conversion spread built into each monthly transaction.
This mechanism is similar to the way PayPal handles “Checkout with Crypto”, which allows online shoppers to make purchases using their cryptocurrency.
So unlike Venmo’s normal fees for cryptocurrency purchases, which can range from $0.50 per transaction to 2.3% of the transaction amount, the “Cash Back to Crypto” program will not have any fees associated with it.
Venmo’s new feature is not entirely crypto-back, but it is one step closer to being so. Cardholders can set up an automatic purchase for their preferred cryptocurrency, to be made as soon as they receive the cash reward when paying with their card.
Users can at any time hold or sell these assets within the Venmo app and change their choice between the four available crypto assets.
However, it is still not possible for customers to move digital assets from the platform into external wallets, so all rewards converted to cryptocurrencies will remain in their Venmo app unless they choose to sell them.
As for activating or deactivating the Cash Back to Crypto programme, users will have to follow a few simple steps directly from the app on their smartphones and will be able to change the decision whenever they want.
The company sees Cash Back to Crypto as a way for newcomers to the crypto world to enter the market without having to worry about the purchase process.
However, unless users make frequent transactions with their Venmo credit card, these cashback-enabled cryptocurrency purchases are likely to be quite small.
Darrell Esch, SVP and General Manager of Venmo, commented on the implementation of this new service:
“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”.