As a freelancer or small business owner in 2023, accepting online payments is extremely convenient compared to only taking cash or checks. Venmo has grown as a peer-to-peer (P2P) platform many customers already use regularly in their daily lives, which seems to make it an obvious fit for small business transactions too. However, their terms of service have specific rules around appropriate business use that are important to follow to avoid account limitations.
This guide will break down key considerations for legally leveraging Venmo and other leading P2P apps to collect payments and grow your independent operation.
Why Venmo Alone Doesn‘t Cut It
Venmo exploded as one of the most popular options for casual peer-to-peer money transfers between friends and family. The app makes it incredibly easy to pay back a friend who spotted you cash for lunch, split the dinner bill, or send a sibling money for a gift.
However, despite Venmo‘s mainstream adoption for personal use, its business payment capabilities are much more limited and restrictive:
Fee Structure
- 1.9% + $0.10 per transaction fee
- No way to set custom prices or tiers
Functionality Issues
- Can only accept payments, not request invoices
- Limited analytics and financial reporting
- No integration with accounting software
Strict Account Limitations
- Required to register a dedicated business profile
- Can‘t use a standard personal account
- Violations risk account review or closure
For large online sellers or service providers processing significant order volume, Venmo falls far short as a standalone payment solution. And smaller entrepreneurs need to carefully follow Venmo‘s rules to avoid compliance issues or sudden loss of account privileges.
The bottom line? While convenient for personal life, Venmo alone is rarely enough for serious small business needs.
Introducing Proper P2P Platforms
Luckily, there are a growing number of dedicated peer-to-peer transaction apps serving small business markets by design, without restrictive account rules or risk of surprise fees from compliance violations.
PayPal
Many people don‘t realize that before spinning out Venmo as a separate company in 2014, Braintree originally launched it in 2009 as an improved P2P payments feature within their PayPal app. And today, PayPal still offers strong support for both personal and business transactions across the same account:
- Send or receive money from anyone with an email address
- Custom invoices and automatic reminders
- Affordable 2.9% + $0.30 transaction fees
- Integrates with PayPal business tools and merchant accounts
The unified personal/business approach makes PayPal a significantly more viable solution as an independent seller‘s primary payment method.
CashApp
Originally named Square Cash, this app comes from the same company behind the Square credit card readers found in the checkout lines of boutiques across America. While frequently used for personal money transfers, CashApp also lets you seamlessly accept business payments without worry:
- Instant transfers from any mobile device
- Design custom prices, store policies, and account labels
- Only 2.75% transaction fee for approved business accounts
- Deposit funds instantly to a linked debit card
As with PayPal, individuals and businesses use CashApp interchangeably under compliant terms of service, creating a flexible environment for small merchants.
Weighing the Pros and Cons
When evaluating potential options for collecting peer-to-peer payments professionally, be sure to carefully compare the specialized small business features against any restrictive account use policies:
| Platform | Personal Use | Business Use | Fees |
|---|---|---|---|
| Venmo | Unlimited | Restricted terms | 1.9% + $0.10 |
| PayPal | Included | Fully supported | 2.9% + $0.30 |
| Cash App | Included | Fully supported | 2.75% |
Conclusion
Accepting online payments should make operating your small business easier, not create compliance headaches and unnecessary account limitations. While extremely convenient for everyday personal spending, relying solely on Venmo for selling goods and services long-term carries notable risks.
Dedicated peer-to-peer platforms like PayPal and CashApp offer more tenable payment solutions for independent working professionals and microbusiness owners. I hope this analysis gives you confidence in identifying and leveraging optimal payment technologies as you continue growing your promising entrepreneurial journey in 2023!
Have you utilized any of these P2P platforms as a buyer or seller? I welcome any firsthand experiences in the comments below!
