How to Use a Prepaid Debit Card to Send Money Including by Venmo

by
Adam Rust

In this entry, I will discuss how consumers can use a prepaid debit card account to send money.

A caveat: these methods only apply to general-purpose-reloadable prepaid debit cards and certain digital online bank accounts. I am not writing about gift cards, cards that hold store credit, traditional branch-first bank accounts (except for those offering Zelle), or funds received as an incentive for signing up for a new service.

First, you can send money with a prepaid debit card with Venmo. You cannot use a prepaid debit card to receive money with Venmo.

Prepaid debit cards that work (partially) with Venmo:

- The FanCard by Sunrise National Bank

- Cards from Card.Com

- Green Dot

- Rush Card (now a brand of Green Dot)

Venmo takes a skeptical stance toward prepaid debit cards. They require that any account (prepaid or debit) registered as a source of funds must bear the same name as the name used for the Venmo account. Moreover, it sometimes restricts who prepaid debit cards can be used. Venmo lets people take money from a prepaid debit card account, but the service will not transfer money onto a prepaid debit card account.

It may be easier to use an online, overdraft-free digital bank account (debit cards not prepaid debit cards) 

I mention the following accounts because they can serve some of the same demographics that might opt for a prepaid debit card. If an account does not have an overdraft function, then the financial institution takes a different view of the risk associated with low-or-no-credit applicants. Digital bank accounts without overdraft that work with Venmo:

- The Varo Money Card is not a prepaid debit card, but it serves some of the same markets. It works with Venmo, Cash, and PayPal Instant Transfer. Note, Varo is unique in certain respects, as it has a fee-free overdraft program. It only makes the fee-free overdraft service available to individual customers who satisfy specific use requirements. Varo does not vet the credit history of applicants.

- The Axos Essentials Card.

- Ally Bank

The Cash Card, a debit card issued by Lincoln Savings Bank, is available to people who use Square's Cash App. Naturally, the Cash Card works seamlessly with Cash App. The Cash App does not work with prepaid debit cards.

Capital One's 360 account does not accept Venmo.

Second, you can complete the entire transfer within the same company. This technique can work with prepaid debit cards and with the digital online-first bank accounts.

Venmo, Pop Money, Varo, Axos, and Square's Cash App will let you send money from your bank account to a bank account of one of your friends.

For example, you could get a Varo Money bank account (in only a few minutes), and if your intended recipient also has one, then you can send money back and forth between those accounts instantly. The funds will settle right away, although in some cases, it may take longer - but your recipient will have "good funds," meaning money that they can spend, in a much shorter time than would be possible with a traditional ACH transfer. This technique works because the bank does not have to send the money through a third-party institution (The Clearing House or the Federal Reserve). Instead, the bank only has to transfer across accounts. This frees up the bank from taking any risk.

Chime's PayFriends function can be a Venmo alternative, and as a mentioned earlier, it bypasses the problem of moving funds through a slow intermediary. Simple, another digital-first bank account from BBVA, allows for Simple-to-Simple transfers and ACH transfers, but not by Venmo, Zelle, or CashApp.

Most prepaid debit cards come with the same ability. You can use almost any prepaid debit card to send money from one account in that platform to another inside the same program. For example, you can send funds from a Green Dot account to another. Usually, the money will arrive immediately. NetSpend's Flash Pay to send money to and from any of the cards in the NetSpend family (NetSpend, Control, AceElite, and Purpose).

The payment function inside Facebook Messenger does not accept a prepaid debit card, nor will it allow funds to be sourced from a credit card. To pay with Messenger, a person must have a debit card issued by a US bank.

Google, Apple, and most of the smartphone providers have a payment service, too.

Usually, it would be next to impossible for a consumer to set up an ACH payment. Historically, banks have done the behind-the-scenes work to orchestrate these transactions. Venmo and its competitor services use application programming interfaces (“APIs”) to facilitate the communication between itself and the banks on both ends of the transaction. Venmo uses Plaid. Square Cash employs its in-house API developers.

Third, you can use a prepaid debit card to send money internationally through an international money transmitter.

If you don’t have a better option, you can go to a Western Union, input the 16-digit number on the face of your debit card, and send money from your account to an international destination. That is hardly convenient, and additionally, sending funds at Western Union or MoneyGram can be very expensive.

Don't expect to be able to use Zelle. At this moment, Zelle does not work with prepaid debit cards.

Bank Accounts that Use Venmo (among other options) for Sending Money
Picture of card
Picture of card
hands holding smartphones to send money with their mobile bank accounts

An alternative for sending money: Zelle

With very few exception's, the twenty largest banks in the United States all accept Zelle (pronounced (Zell, not Zell-e). With Zelle, you can send money instantly to another Zelle-friendly account. In my opinion, Zelle is superior: it completes the payment almost immediately and without a fee. In Zelle, funds are credited to the recipient's account (and debited from yours) right away. You can send money to a friend and they will see that your payment was made right away, an outcome that prevents any hard feelings!

Some banks will credit the recipient's account in less than a minute. I have experienced delays with First National Bank, often for as long as an entire business day, and even in cases where the sender had already sent good funds transfers to me several times previously. If your bank takes more than three hours to process a Zelle payment, you should bring the problem to their attention.

Note: even though Zelle works with the large banks, it will not accept prepaid debit cards even if they are issued by one of those institutions. Zelle is a debit card network.

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Adam Rust has worked to defend consumers against harmful financial practices since 2005. He has written extensively about overdraft fees, payday lending, credit insurance, student loans, prepaid debit cards, high-cost installment loans, and subprime mortgage lending. The New York Times interviewed him when it reported on the CFPB's rulemaking on prepaid debit cards; subsequently, his research paper framed the debate on consumer protections.

He serves on the Board of the US Faster Payments Council. He is Director of Research at Reinvestment Partners in Durham, North Carolina. He is the author of BankTalk. He is the author of "This is My Home: Challenges and Opportunities of Manufactured Housing" and has testified to Congress on how to redress some of the problems with manufactured housing. See more on his LinkedIn profile.