Venmo Crypto Fees: The Hidden Costs of Using Cryptocurrency on Venmo

If you're using Venmo for cryptocurrency transactions, you may not be fully aware of the hidden costs you're incurring. Venmo, a popular peer-to-peer payment service owned by PayPal, has embraced the cryptocurrency trend by allowing users to buy, sell, and hold crypto assets like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. While this might seem like a seamless integration of crypto into everyday digital transactions, there's a price to pay, and it's crucial to understand the fees involved.

The platform charges a fee whenever users buy or sell cryptocurrency. This fee is typically a percentage of the transaction amount and is calculated based on the size of the transaction. While the ease of use on Venmo is unparalleled, the fees associated with crypto transactions can erode your returns, especially if you’re making frequent small trades. But what exactly are these fees, and how do they compare to other crypto platforms?

The Venmo Crypto Fee Structure Venmo applies a transaction fee when users buy or sell cryptocurrency. Here’s a quick breakdown:

• For transactions of $1 to $4.99: $0.49 fee
• For transactions of $5 to $24.99: $0.99 fee
• For transactions of $25 to $74.99: $1.99 fee
• For transactions of $75 to $200: $2.49 fee
• For transactions over $200: 1.8% of the total transaction

What does this mean in practice? Let’s say you decide to buy $10 worth of Bitcoin on Venmo. You’d pay a $0.99 fee, which translates to a 9.9% fee. In contrast, if you were to buy $300 worth of Bitcoin, you’d pay 1.8%, or about $5.40. The fees decrease in percentage terms as the transaction size increases, but they can still add up quickly if you make frequent purchases.

For comparison, Coinbase, another popular cryptocurrency exchange, charges a fee of around 1.49% on transactions under $200 and up to 3.99% for debit card purchases. In this light, Venmo’s fees might seem competitive for larger transactions, but for smaller purchases, the fixed fees can eat into your investment.

Other Hidden Costs: The Spread In addition to these explicit transaction fees, there’s also a hidden fee called the "spread," which is the difference between the price at which Venmo buys cryptocurrency and the price at which they sell it to you. Venmo applies a spread of about 0.5% on the value of the crypto you are buying or selling. This means that even if you don’t see a direct fee, Venmo is still making money from your transactions by offering you a slightly worse exchange rate than what’s available on the open market.

How These Fees Add Up To illustrate the effect of these fees, let’s look at a couple of scenarios. Suppose you’re a casual user who buys $20 worth of Bitcoin once a week for a year. Here’s how the costs break down:

Transaction Size	Venmo Fee	Spread (0.5%)	Total Fee	Effective Cost of Transaction
$20	$0.99	$0.10	$1.09	5.45%

Over the course of a year, you’d pay about $56.68 in fees for these transactions. If you were using a platform with lower fees, like Binance or Kraken, your costs would likely be significantly lower, leaving you with more of your investment intact.

Are Venmo's Crypto Fees Worth It? For many users, Venmo’s convenience may outweigh the higher costs. After all, Venmo integrates seamlessly with your existing financial life—you can send payments to friends, make purchases, and buy cryptocurrency all in one place. If you’re a beginner or someone who only wants to dabble in crypto, the ease of use might justify the fees.

But if you’re serious about investing in cryptocurrency, Venmo might not be the best option due to its relatively high fees, especially for small transactions. Other platforms, such as Coinbase Pro or Gemini, offer lower fees for more frequent traders or those dealing with larger amounts.

Alternatives to Venmo for Cryptocurrency Transactions If you’re looking for alternatives that might offer better rates, here are a few options:

1. Coinbase Pro: With lower fees than its regular Coinbase platform, Coinbase Pro is great for more serious investors.
2. Binance: Known for its low trading fees and wide variety of crypto assets.
3. Kraken: Offers competitive fees and advanced trading tools for experienced users.
4. Gemini: Features a user-friendly interface with reasonable fees for both casual and professional traders.

In short, while Venmo's crypto functionality is convenient, especially for beginners, the fees are something you should carefully consider. Frequent or high-volume traders would likely benefit from exploring other platforms that offer lower fees and spreads.

Final Thoughts: Convenience vs. Cost The appeal of Venmo lies in its simplicity and widespread adoption. You can send money to your friends, split dinner bills, and now even buy crypto—all within one app. However, this convenience comes at a price, and for those looking to invest seriously in cryptocurrency, the fees can be a significant drag on your overall returns.

Before deciding whether to use Venmo for crypto, weigh the convenience against the costs. If you’re just getting started with crypto and don’t mind paying a bit extra for the ease of use, Venmo could be a good choice. But if you plan on making larger or more frequent transactions, it might be worth taking the time to explore platforms with lower fees.

Remember, in the world of investing, small costs can compound over time, and minimizing fees is a key part of maximizing your returns.