Venmo has rolled out a new rewards program, Venmo Stash, offering cashback to users of its Mastercard Debit Card. This strategic move aims to engage customers who frequently use the payments app and interact with their favorite brands, particularly appealing to a younger demographic that increasingly favors debit cards over credit.
The Shift to Debit
While cashback incentives are traditionally associated with credit cards, Venmo's program stands out by focusing on debit card users, offering rewards of up to 5%. This approach directly addresses a significant shift in consumer behavior, especially among Gen Z. Recent studies highlight this trend: a 2024 study cited by eMarketer found only 39% of Gen Z frequently use credit cards, compared to 51% of older generations. Furthermore, a Morning Consult survey for Cash App Afterpay from earlier this year revealed that 63% of Gen Z users prefer debit cards over other payment methods. This preference has prompted payment providers and retailers to adapt by introducing more debit rewards and offering alternatives like "buy now, pay later" (BNPL) services such as Affirm, PayPal Pay Later, or Klarna.
How Venmo Stash Works
The Venmo Stash program is designed to deepen user engagement within the Venmo ecosystem. Initially, customers earn 1% cashback when spending their Venmo balance with their Venmo Debit Mastercard. This reward increases to 2% for those who enable auto-reloads to automatically replenish their balance. The highest tier offers 5% cashback for customers who receive monthly Direct Deposits on Venmo.
Uniquely, Venmo's program doesn't offer cashback based on broad spending categories like groceries or gas. Instead, it allows customers to select from curated bundles of popular brands. For example, users might choose a group of brands that includes McDonald's, TikTok Shop, Uber, and Uber Eats, or another featuring Amazon, DoorDash, Domino's, and Walgreens.
Strategic Goals and Competition
According to the PayPal-owned company, the program's core objective is to incentivize continuous use of Venmo's services, thereby bringing more funds into its payment ecosystem. This initiative also positions Venmo to compete more effectively with other cashback incentives offered by rivals, such as Cash App's offers for its own debit card customers. Looking ahead, Venmo Stash is slated to expand next year, allowing customers to earn rewards when paying with Venmo at merchants across its nationwide network.
