Venmo launches cash back rewards program for debit cards

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 interact with Venmo products.

While cash back rewards are a common incentive for credit cards, Venmo rewards — which can be up to 5% — are credited back to Venmo’s Mastercard debit card.

The company explains that the program is designed to incentivize continued use of the Venmo service by bringing more money into the ecosystem.

However, this program also represents a new way in which brands today are trying 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 to 51% for older generations. Another Morning Consult survey of Cash App Afterpay earlier this year indicated that 63% of Gen Z users said they preferred debit cards over other payment methods.

As a result, payment providers and retailers are looking to accommodate younger consumers by offering more discount rewards and offering alternatives at checkout – such as using buy now, pay later (BNPL) services such as Affirm, PayPal Pay Later, or Klarna.

In the case of Venmo, the program is designed to offer greater rewards as customers engage more with Venmo products. The company believes this keeps them invested in the Venmo ecosystem.

It also competes with other cash back incentives offered by Venmo’s competitors, such as Cash App Offers, which are distributed to customers of its Cash App debit cards.

First, customers get 1% cash back on their Venmo Debit Mastercard when they spend their Venmo balance. Rewards grow to 2% when customers turn on automatic reloads to keep their balance automatically replenished. Customers can earn 5% cash back when they receive direct deposits on Venmo each month.

However, instead of offering a set percentage based on spending category, such as groceries, gas or dining, Venmo lets customers choose from curated packages from their favorite brands. For example, you can choose 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 Venmo Stash will expand next year to offer rewards to customers when they pay with Venmo at merchants within its national network.