Venmo: PayPal’s Mobile Payment Platform

Venmo is a mobile payment service owned by PayPal. Venmo customers can can pay for goods and services as well as transfer funds to others using a mobile phone app. Venmo was founded in 2009 as a mobile solution for friends to spit bills.

Quick Venmo Facts

  • Venmo has 52 million users
  • Over 2 million retailers accept Venmo
  • 66 percent of young Americans use Venmo
  • The platform processed payments amounting to 102 billion dollars in 2019

Venmo was founded in 2009 by two former college roommates who wanted a better way to pay each other back. What started off as a simple SMS platform to send and receive money has evolved into a social payments app allowing people to split bills, pay each other back for rent, and make purchases at approved merchants.

How to Create Venmo Account

Users create an account via the website or mobile app, iOS and Android, and provide personal details, phone number and email address. You then need to verify your bank account information. You have to be physically located in the US to create your account.

Venmo is only available in the United States and only compatible with U.S. based bank accounts and phone numbers. You must also be able to send and receive SMS/text messages from short codes. Getting the Venmo card, you will need to have a Social Security Number.

How It Works

how venmo works

Adding Funds to Venmo

Once your account is set up, you can use the money in your Venmo account for their transactions. To add money into your account, you need to link your bank account, debit card or credit card to your Venmo account. If you do not have enough money in the account when making a transaction, Venmo will automatically withdraw the money from the linked bank account or card. Venmo has no overdraft/credit feature.

Your funds are eligible for FDIC insurance if you are a Venmo card holder and you have set up Direct Deposit.

Services and Features

Make Payments

You can pay friends and family with Venmo using the money you have in your Venmo account or link your bank account or debit card. You only need the recipient’s phone number, Venmo username or email. If the recipient doesn’t have a Venmo account, they need to create one. You can also sync your phone and Facebook contact in the app. Paying with a bank account or debit card is free, but payments with a credit card have a 3% fee for each transaction

Make Purchases

You can use Venmo app to make purchases. Over 2 millions companies in the US accept Venmo as a payment option. They include Uber rides and Uber Eats, Jane, Urban Outfitters, Poshmark, Game Time, GrubHub, and Foot Locker. You can buy using the app or MasterCard.

Direct Check Deposit

If you have the Venmo debit card, you will be able to set up Direct Deposit so your paychecks or tax refunds can be deposited into your account.

Venmo Rewards

Venmo Rewards is a program that offers automatic cash back when users pay with the Venmo card at some retailers. Venmo card holders automatically earn cash back on qualifying purchases. Rewards are deposited directly into their Venmo account. Opt-in is not required for this service.

Venmo News Feed

Venmo news feed is a social networking interaction in the app. When a customer makes a transaction, the transaction details (without the payment amount) are shared on the user’s “news feed” and to the user’s network of friends. Users can interact with each other via comments, emojis and likes. This means that Venmo users can see how other users spend their money. The news feed is public by default. but customers can change their settings to private. In 2018, the Federal Trade Commission asked Venmo to be more transparent by letting customers know that their transactions are public.

Venmo Payouts

Businesses can directly pay consumers through Venmo Payouts. This service allow businesses to connect with Venmo customers through a API integration to pay out money. Instead of writing checks, businesses can use Venmo to transfer money through Venmo Payouts for things like rebates, rewards, etc.

Accepting Venmo

Retailers can accept Venmo payments through PayPal’s online checkout process, where users can select the Venmo payment option after tapping the PayPal button. Retailers need to first be PayPal merchants to use this service.

Venmo connects real friends who share what they’re experiencing and buying. Behind every person who pays with Venmo is a network of friends who can view, like, and comment on a shared purchase, bringing your brand front and center in their conversations.

venmo mobile payment US

Fees

One of the attracting features of Venmo is that etting up Venmo account is free and there is no monthly charges. See the full list of fees below.

ServiceFee
Account set upFree
Monthly chargesFree
ATM balance inquiry (in-network or out-of-network)Free
ATM withdrawalFree in-network/$2.50 out-of-network
Customer service (automated or live agent)Free
InactivityFree
Cash reloadN/A
Electronic withdrawal (standard or Instant)Free or 1%* (min. $0.25, maximum $10 fee for instant transfer)
Over-the-counter cash withdrawal (bank and other financial institution)$3.00
Receiving/withdrawing money into your Venmo account or using standard transfer to your bank account.Free
Sending money from a linked bank account, debit card or your Venmo balanceFree
Sending money to people (using your credit card)3%

* This fee can be lower depending on how this account is used.

Venmo vs PayPal

Venmo is owned by PayPal. Venmo and PayPal are both mobile wallets. However, Venmo is mostly used for personal accounts with most services being free while PayPal is ideal for small and big businesses and charges a fee for transaction and transfers. You can send money to PayPal from Venmo but you need a PayPal Cash or PayPal Cash Plus to do this.

Is Venmo Secure

Venmo uses encryption technology to protect account information and monitor account activity for any suspicious transactions. Eligible purchases are covered by authorized merchant payment protection plan. Account information is stored in various servers in secure locations. If you have lost your phone or suspect unauthorized activity, you can prevent your phone from accessing your Venmo account.

Conclusion

Venmo is an ideal mobile wallet for sending money to family and friends as well as splitting bills without incurring exorbitant fees. The major drawback for this platform is that you need to be in the US to create your account and must have a US bank account.