Ven-No: How Venmo’s new rules are hitting small businesses and side hustles

“Hey, would you mind putting a random emoji in the ‘what’s it for’ field?” asked Andrew Fodor as he bagged coffee at the Ithaca Farmer’s Market.

His customer looked at him in confusion. “Shoot, sorry. I just sent it and I put a coffee cup in there.”

Andrew winced and explained his odd request to the customer. “Venmo is trying to screw with us small guys. I don’t want it to be obvious that it’s a business transaction.”

Andrew’s small coffee business in the Finger Lakes relies on word of mouth and farmer’s markets. He drives to several throughout the week, offering fresh roasted, fair-trade coffee and free drinks with each purchase. His presence at farmer’s markets has led to some business opportunities—a few local stores and cafes have begun carrying his brand—but presents challenges for dealing with customers.

“It’s a college town, it’s a tourist town. People come to the market because it’s a good vibe on a Saturday morning, but most don’t bring cash. A lot of the vendors around here rely on Venmo and this is really going to hurt.”

That change came in an announcement earlier this year from Venmo framed as increased protections for consumers. It has been interpreted by most small businesses and people with “side hustles” as a change at their expense. Customers can now add a “goods and services” tag to their purchases, setting goods bought from reimbursing friends for dinner as an example.

In other words, buyers can flag commercial transactions from sellers who are not currently using a Venmo business account. When Venmo catches these flags, it will automatically deduct 1.9% of the transaction—plus 10 cents—and make the buyer eligible for Venmo’s Purchase Protection Program. The company is specifically targeting consumers to make this new policy known.

“I understand what they’re doing. They want to drive us to paying for the business app,” said Andrew. “I can respect that. But the farmer selling radishes in the next booth… his customers don’t really need a protection plan for that. And we’re all losing almost a dollar on every transaction. That adds up.”

So what should a small business do?

The risk of using free/consumer versions of tools for small businesses and side hustles is always that the rules will change and catch you off guard. That’s where tools like Solo Hustle become important.

Growing a business isn’t just about revenue. Marketing decisions, customer communication, taxes, and more can suck up a small business owner’s time or make side hustles more trouble than they’re worth. Solo Hustle was created to take the pain out of starting and growing your passion projects.

What to look for in a solution

Think big. Your immediate concern might be accepting payments at local farmers markets and fairs. But payments alone won’t grow your business. How are people finding you? Do you have a new product your past customers will love? Are taxes a nightmare?

Look for an affordable tool that provides more than just one solution to one problem. Managing multiple ad hoc solutions can be more costly in the long run and take more of your time. Solo Hustle is a great example.

Solo Hustle not only makes it easier to accept payments in the field, it also provides functions such as landing pages, appointment scheduling, and customer communications. With a tool like Solo Hustle, Andrew could manage his coffee business with ease:

• He can build professional landing pages to show why his coffee is higher quality and more unique than competitors.

• He can manage B2B communications with the vendors and shops selling his product.

• He can update consumer customers about upcoming fairs and markets he’ll be visiting.

• He can handle all of his invoices, mileage, and payments in one place to simplify quarterly tax filings.

It’s normal for businesses to rely on free or personal solutions as they start up, but thinking small can keep a business small. Investing in affordable tools designed specifically for growing a side hustle can prevent nasty surprises when those tools change the rules.