Venmo on Monday introduced a new rewards program, Venmo Stash, offering cash back to customers who transact with their favorite brands on the payments app and engage with Venmo’s products.
While cashback rewards are a common incentive for credit cards, Venmo’s rewards — which can be up to 5% — are returned to Venmo’s Mastercard Debit Card.
The program is designed to incentivize continued use of Venmo’s service by bringing more funds into the ecosystem, the company explains.
However, this program also represents a new way that today’s brands are attempting to reach younger users, many of whom have shown a preference for debit cards over credit cards.
One 2024 study cited by eMarketer indicated that only 39% of Gen Z users reported frequent credit card use, compared with 51% for older generations. Another Morning Consult survey for Cash App Afterpay from earlier this year noted that 63% of Gen Z users said they favored debit cards over other payment methods.
As a result, payment providers and retailers are looking to accommodate younger consumers by rolling out more debit rewards and by offering alternatives at checkout — like the use of “buy now, pay later” (BNPL) services such as Affirm, PayPal Pay Later, or Klarna.
In Venmo’s case, the program is designed to offer larger rewards as customers interact more with Venmo products. This keeps them invested in the Venmo ecosystem, the company believes.
It also competes with other cashback incentives offered by Venmo’s rivals, like Cash App’s offers, which are doled out to its own Cash App debit Card customers.
Initially, customers earn 1% cash back for their Venmo Debit Mastercard when they spend their Venmo balance. Rewards grow to 2% when customers turn on auto reloads to keep their balance replenished automatically. And customers are able to earn 5% cash back when they receive Direct Deposits on Venmo each month.
However, instead of offering a certain percentage back by spending category, like groceries, gas, or dining, Venmo’s program has customers pick from curated bundles of their favorite brands. For instance, you could pick a group of brands that includes McDonald’s, TikTok Shop, Uber, and Uber Eats, or one that offers Amazon, DoorDash, Domino’s, and Walgreens.
The PayPal-owned company says that, next year, the Venmo Stash will expand to offer customers rewards when they pay with Venmo at merchants within its nationwide network.
