Venmo on Monday introduced a new rewards program, Venmo Stash, offering cash back to customers who transact with their favorite brands on the payment app and use Venmo products.
Cash back rewards are a common credit card incentive, but Venmo rewards (up to 5%) are returned to Venmo’s Mastercard debit card.
The company explains that the program is designed to encourage continued use of the Venmo service by bringing more funds into the ecosystem.
But the program is also a new way today’s brands are trying to reach younger users, many of whom prefer debit cards over credit cards.
According to a 2024 study cited by eMarketer, only 39% of Gen Z users reported using credit cards frequently, compared to 51% of older generations. Another Morning Consult study on Cash App Afterpay conducted earlier this year found 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 cater to younger consumers by rolling out more debit benefits and offering alternatives at checkout, such as using buy now, pay later (BNPL) services such as Affirm, PayPal Pay Later and Klarna.
In Venmo’s case, the program is designed to offer customers greater rewards the more they interact with Venmo products. The company believes this will preserve its investment in the Venmo ecosystem.
It also competes with other cash-back incentives offered by Venmo’s rivals, such as Cash App offers offered to its own Cash App debit card customers.
Initially, customers will earn 1% cash back on their Venmo Debit Mastercard when they use their Venmo balance. If a customer turns on auto-reload to automatically replenish their balance, the reward increases to 2%. Customers can also earn 5% cash back when they receive direct deposits with Venmo each month.
However, instead of giving back a percentage of each spend category like groceries, gas, and meals, Venmo’s program lets customers choose from a curated bundle of their favorite brands. For example, you can choose a group of brands that includes McDonald’s, TikTok Shop, Uber, and Uber Eats, or choose a brand that offers Amazon, DoorDash, Domino’s, and Walgreens.
The PayPal-owned company says it plans to expand Venmo Stash next year to offer perks to customers who pay with Venmo at merchants in its nationwide network.
