How Venmo fosters financial responsibility through the Venmo Teen Account
- The Venmo Teen Account is wired into the existing Venmo account of parents to keep parents in charge.
- The custodial account also offers personalized Mastercard debit cards for its younger customers to encourage smart spending decisions from an early age.
PayPal-owned mobile payment service Venmo is expanding its reach by rolling out new Venmo Teen Accounts that offer financial flexibility to 13 to 17 year olds, but keep parents in charge.
Like it or not, Mom and Dad know best
The Venmo Teen Account is wired into the existing Venmo account of parents. Parents and legal guardians can sign up and open a free account through the Venmo app on behalf of their teenagers so they can make transactions. To sign up for the Teen Account, parents can navigate to the 'Me' screen in the Venmo app, tap their name in the top left-hand corner, and direct to "Create a teen account" from the drop-down menu.
The custodial account also offers personalized Mastercard debit cards for its younger customers to encourage smart spending decisions from an early age.
“The Venmo Teen Account empowers teens to take charge of their financial lives, offering a separate balance from the parent’s personal Venmo account, along with the teen’s own debit card in a range of colors and designs,” Erika Sanchez, VP and general manager at Venmo told Tearsheet.
Offering debit cards to younger consumers provides them a running start to take on better money habits but the concept is not entirely new. Greenlight kids' debit card and GoHenry kids’ debit card are similar offerings that are already en route to offer the younger cohort the flexibility of managing their money. The most recent to provide a service akin to Venmo’s is its rival Cash App. Cash App enables younger teens to send peer-to-peer payments through a Cash App account authorized by their parents or guardians along with a customized Visa cash card.
Making the right money moves: Importance of financial literacy for Gen Z
Smooth money management and making informed financial decisions also call for better financial literacy. Research shows that over 50% of parents are interested in using an app to help their children learn about money management. Many parents support the idea of improving their younger ones' understanding of important financial concepts and habits. Research also reveals that having money conversations with children early helps in teaching them the value of money and shapes them to become financially confident adults later on in life. Bearing this in mind, the account offers educational resources as part of the account set up for both the parent and their child, accessible at any time after the account is up and running.
While Gen Z is considered a smarter and more informed generation in exploring their financial footing, they scored the lowest in financial literacy compared to other generations. This insinuates that they still have more to learn. It also calls for parents’ attention to monitor and supervise this cohort and their money dealings to keep them away from slipping into financial trouble.
The new offering lets parents keep tabs on their child’s transactions, receive alerts for payment processing, and oversee privacy settings for the Teen Account – like reviewing their child’s friends list and blocking users from interacting with the account. Parents are also given the authority to maintain comprehensive control over debit cards linked to the Teen Accounts, with the capability to lock and unlock cards and manage PIN settings.
Additionally, certain features are inaccessible to the Teen Account by design that otherwise comes with a standard Venmo account eligible for users who are 18 or older – like Venmo credit or crypto products or services.
Besides that, there are other things that younger consumers can do with the new product; including receiving direct deposits and funds into their accounts from a side gig, for example. They can also view their spending in the Venmo app. However, access to the Venmo app hinges on parents’ approval. When it comes to their debit cards, teens can withdraw money from any ATM, provided the amount is within the company’s daily withdrawal cap of $400.
Parents or legal guardians of Gen Z ages 13 -17 years old who have an identity-verified Venmo account in good standing are eligible to open Teen Accounts, explained Sanchez. The offering is rolling out to select customers beginning June 2023, followed by general availability soon.