Venmo Introduces “Cash a Check” Feature to Select Customers
One of the ironies of FinTech in recent years has been that, while startups have managed to disrupt the banking and payments spaces by doing things differently, they’ve also found success in adopting established mediums and making them a part of their platforms. For example, the past several months have seen a rash of FinTech debit card options hit the market. Now, the popular peer to peer payment app Venmo is adding a new/old feature to its app with the introduction of Cash a Check.
Like other mobile check deposit options, Venmo’s Cash a Check allows users to simply submit photos of a paper check in order to add the amount to their Venmo balance. Before eligible customers can unlock this feature, they’ll need to verify their date of birth, Social Security number, and birthdate in the app. Additionally, while checks can be deposited for free with a 10-day wait, there is currently a 1% instant deposit fee (with a minimum fee of $5) for payroll or government checks with a pre-printed signature and a 5% instant deposit fee (also a $5 minimum fee) for all other check types, including payroll or government checks that are hand-signed. At this time, this function may only be available to an undisclosed number of Venmo customers in the United States.
Venmo’s latest feature is actually powered by First Century Bank and Ingo Money. This duo also offers a standalone app where users can deposit checks into third-party bank accounts or into their PayPal account. However, building this capability directly into the Venmo app is certain to be more convenient for customers.
The introduction of Cash a Check comes as a second round of stimulus checks are currently being distributed to eligible Americans. While those with direct deposit info on file with the Internal Revenue Service may already have received their payments, those requiring paper checks or pre-paid debit cards may still be waiting. On that note, Venmo is waiving the instant disbursement fees for those cashing stimulus checks on the apps, meaning that customers will see the full value of their deposited checks arrive in their accounts within minutes.
While the Venmo Cash a Check feature could prove popular for unbanked or underbanked customers and serve as competition for check cashing stores, the fees associated with the feature (at least for transfers without a lengthy wait) may be a turn-off. That said, it’s nice to see that Venmo and their partners for this function are waiving associated fees for stimulus checks. Overall, it will be interesting to see if Cash a Check catches on and what other traditional banking features Venmo takes on next.