Venmo on Monday introduced a new rewards program, Venmo Stash, which offers cash back to customers who transact with their favorite brands on the payments app and engage with Venmo products.
While cash back rewards are a common incentive for credit cards, Venmo’s rewards — which can be as much as 5% — are returned to your Venmo Debit Mastercard.
The program is designed to incentivize continued use of Venmo’s service, bringing more capital into the ecosystem, the company explains.
However, this program also represents a new way in which today’s brands are trying to reach younger users, many of whom have shown a preference for debit cards over credit cards.
A 2024 study reported by eMarketer reported that only 39% of Gen Z users reported frequent credit card use, compared to 51% for older generations. Another Morning Consult survey on Cash App Afterpay by earlier this year noted that 63% of Gen Z users said they prefer debit cards over other payment methods.
As a result, payment providers and retailers are seeking to serve younger consumers by launching more debit rewards and offering alternatives at checkout — such as using buy-now-pay-later (BNPL) services such as Affirm, PayPal Pay Later or Klarna.
In Venmo’s case, the program is designed to offer greater 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 rivals Venmo, such as the Cash App offerswhich are granted to Cash App debit card customers.
To begin with, customers earn 1% cash back on their Venmo Debit Mastercard when they spend their Venmo balance. Rewards increase to 2% when customers activate auto top-ups to keep their balance topped up automatically. And customers can earn 5% cash back when they receive Venmo Direct Deposits each month.
But instead of offering a certain percentage back per spending category, such as groceries, gas or food, Venmo’s program lets customers choose from select packages of their favorite brands. For example, you could choose a brand group 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 Venmo Stash will expand to offer customers rewards when they pay with Venmo at merchants within its national network.
