Venmo launches debit rewards program 'Stash' to compete with credit cards

Venmo unveiled a new reward program, Venmo Stash, on Monday, offering cash back to customers who transact with their favorite brands on the payments app and engage with Venmo’s products.

Venmo offers a distinct rewards program, with up to 5% cashback, which is credited to the user’s Venmo Mastercard Debit Card, unlike the typical credit card incentive.

The company’s goal is to encourage greater engagement and to keep more funds circulating within the Venmo ecosystem.

Importantly, this initiative reflects a growing trend: brands seeking innovative ways to connect with younger consumers, many of whom prefer debit cards over credit cards.

A 2024 study cited by eMarketer revealed that only 39% of Gen Z users reported using credit cards frequently, compared to 51% among older generations. Additionally, a Morning Consult survey for Cash App Afterpay conducted earlier this year indicated that 63% of Gen Z users preferred debit cards over other payment methods.

As a result, payment providers and retailers are adapting to the preferences of younger consumers by introducing more debit rewards and offering alternative payment options at checkout. These options include services such as “buy now, pay later” (BNPL), provided by companies like Affirm, PayPal Pay Later, and Klarna.

Venmo, for example, has designed its rewards program to offer greater incentives as customers engage more with Venmo products. The company believes this approach helps keep users invested in the Venmo ecosystem.

It also competes with other cashback incentives offered by Venmo’s rivals, like Cash App’s offers, which are distributed to its own Cash App debit card customers.

Initially, customers earn 1% cash back for their Venmo Debit Mastercard when they disburse their Venmo balance. Rewards increase to 2% when customers enable auto-reloads, keeping their balance replenished automatically. Customers can earn 5% cash back on Direct Deposits on Venmo each month.

However, instead of proposing a certain percentage back by spending category, such as groceries, gas, or dining, Venmo’s program has customers pick from curated bundles of their favorite brands. For instance, you could 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.

Next year, Venmo Stash, which PayPal owns, will broaden its offerings. It will start giving customers rewards when they use Venmo for payments at merchants within its nationwide network.