Venmo Review: What Is It, How Does It Work and Is It Safe?

Venmo is a free mobile wallet and digital payment network owned by PayPal that has revolutionized splitting the dinner bill since its founding in 2009. The platform, which comes in the form of an app, as well as a website, lets users transfer money instantly to friends, family and businesses. Users link their debit card, bank account or credit card to the iOS- and Android-friendly app, and can then pay and receive cash via the platform. Money is stored in a user’s Venmo account until they send it to another user or transfer it to a bank account.

The app combines a person-to-person payment system with the entertainment of a social network like Facebook. Users can see a feed of payments and emoji-filled descriptions made by their friends and family, which sets it apart from similar apps such as Zelle, Square Cash or Popmoney.

Is Venmo safe to use?

Overall, the platform is safe to use. The company uses encryption to store and manage users’ sensitive information. Additionally, users can set up multifactor authentication, as well as add a PIN number to their account to add extra layers of security. However, like any application that is tied directly to a user’s bank account, there are always security concerns.

The Federal Trade Commission settled a case earlier this year with Venmo after accusing the company of misleading users about the availability of their money and the extent to which they could keep transactions private. The FTC said even when consumers received an immediate notification of received money, the company could still freeze or reverse a payment, resulting in lost funds and merchandise.

Venmo fraud protections

Despite its popularity — in the first quarter of this year, Venmo payments grew to $12 billion, up 80% over the same period last year — security concerns of peer-to-peer payment apps were raised anew this spring when rival Zelle proved vulnerable to fraud. Venmo, like Zelle, does not offer buyer or seller protection, but it upgraded security protections after complaints in 2015, sending regular notification emails with transaction histories so users can more easily spot any suspicious payments.

Avoiding scams on Venmo

A widely reported scam involved a man who handed over a set of limited-edition Yeezy Zebra sneakers he sold for $13,550, only to see the money disappear from his Venmo account when the buyer later reversed the charges.

Venmo’s terms of service prohibit using a personal account to sell goods or services. The service is designed for payments made between people who trust each other and discourages users from accepting or making payments to people they do not know.

How does Venmo work?

This service gives consumers a way to pay or get paid by friends without using cash. The application connects directly to debit cards, credit cards and U.S. bank accounts to provide users with a “social way” to send and receive money. The app’s home screen resembles a social network feed, where users see which of their friends paid each other and for what. Purchases are public by default, so if you don’t want the network to see what payments you send and receive, change your settings.

How to send money with Venmo

To send money via Venmo, a user must first connect a funding source to the app.

Connecting a funding source via the mobile app

Login to the mobile app and navigate to the "?" on the top left of the app -> “Settings” -> “Banks & Cards.” From here, users have the option to connect their bank account or a debit/credit card.

Connecting a funding source via Venmo.com

Navigate to the “settings” tab on the home screen. Click on the tab “Banks & Cards” -> “Edit Payment Methods.”

When adding a bank account directly to Venmo, users must verify their bank account.

Verifying a bank account with Venmo

Users have two options to verify their bank account:

Instant verification requires users to enter the username and password they use for their online banking securely within the Venmo app. It should be noted that only certain financial institutions allow instant verification.

Users may also manually enter their bank account number and routing number, after which Venmo will issue two small withdrawals (less than $1 each). These show up in one to three business days on a user’s online banking statement. Users then verify these amounts with Venmo, after which two small deposits are issued to offset the withdrawals.

Sending money with Venmo

Sending money via the Venmo App

In the upper right-hand corner of the app, there is a square with a pencil symbol inside of it. Click the icon, select the friend (or friends) you’d like to pay, enter the amount and a note about the payment.

You can decide if you’d like the transaction to be public or private by clicking on the globe in the lower right-hand corner of the screen. Once you’ve completed all necessary fields, press the “Pay” icon.

TIP: Always double-check with friends on their Venmo usernames to avoid paying the wrong person. If you do actually pay or charge the wrong person, follow these steps. Additionally, you have the option of entering a friend’s phone number or email account.

Sending money via the Venmo.com

At the top of the homepage click the “Pay” button, then enter the username. Enter the email or phone number of the person you’d like to pay, add the amount and a note for the transaction. There is a small icon that shows the privacy options for the transaction right next to the “Pay” icon. Once you’ve entered all the necessary fields, click “Pay.”

How to receive money with Venmo

If someone pays you via Venmo, you’ll receive a notification that you’ve been paid. This money is automatically stored in your balance, which can be used to pay others or be transferred to your bank account.

Transferring money to your bank via the Venmo App

Tap the "?" icon, select the amount you’d like to transfer, which account you’d like to transfer your money to and hit “Transfer.”

Transferring money to your bank via Venmo.com

Under your username on the upper right-hand corner of the website, your balance will be listed. Under the balance, there will be a button “Transfer to bank.” Select the amount, the specific account and click on “Transfer.”

Additionally, users have the ability to request money within the app.

Requesting money via the Venmo App

Click the pencil icon in the upper right-hand corner of the app, enter the username, email or phone number of the person you’d like to request money from. Enter the amount, a note for the transaction and click the “Request” button.

Requesting money via Venmo.com

At the top of the homepage, click on “Charge” button. Enter the email or phone number of the person you’d like to charge, add the amount and note for the transaction. Press the “Charge” button when you’ve entered all the necessary information.

How long does Venmo take to transfer money to a bank?

When transferring money out of the application, Venmo will give you an estimated arrival date of your funds. If you initiate a bank transfer before 7 p.m. EST on a business day, your funds will generally be available the next business day; however, it can take up to three days if the transfer occurs during a weekend or bank holiday.

It should be noted that Venmo reviews transactions for suspicious activity and fraud when transferring money out of the application. This review can result in delays or canceled transactions, among other things.

A recently added “Instant Transfer” feature lets users receive transfers to their debit cards almost immediately for a charge of $0.25. This feature is only available to Visa or Mastercard holders, and funds are transferred typically within 30 minutes.

Is there a limit to how much money you can send and receive with Venmo?

New users cannot send more than $299.99 or transfer more than $999.99 to their bank in a seven-day period.

Once a user verifies his or her identity, a user can send up to $2,999.99 a week, and transfer up to $19,999.99 per week. However, no user can transfer more than $2,999.99 to their bank in one transaction.

Are there any fees to use Venmo?

Venmo charges a 3% fee for making payments with a credit card. However, making payments via credit card to an authorized merchants is free with Venmo. There are no fees for using the service when a user is funding a transaction with their Venmo balance, debit card, bank account or prepaid card.

For users taking advantage of the “Instant Transfer” feature, there is a charge of $0.25 per transfer.

Are there any other limitations to Venmo?

Venmo’s user agreement prohibits users from buying or selling goods on the app and/or website. Nor does the company offer buyer or seller protection, though you could find help through your credit card company or bank, depending on which type of account you tied to your Venmo ID. It should also be noted that Venmo payments made to authorized merchants do have buyer protection.

How does Venmo make money?

Venmo makes money via the 3% fee for credit card transactions, the “Instant Transfer” fees and fees charged to authorized merchants, similar to how merchants pay credit card companies a small percentage fee per transaction. This is expected to grow as the company develops more business partnerships.

Venmo vs. other person-to-person payment networks

Venmo vs. PayPal

The process to send and receive cash via Venmo and PayPal is virtually identical, which makes sense considering PayPal bought Venmo in 2013. Both peer-to-peer networks withdraw money directly from a user’s balance before withdrawing from a debit card, bank account or credit card (for a fee). Deposits are made into a user’s account, where funds can then be transferred to a bank account. PayPal offers buyer and seller protections on payments made for goods and services. However, if you’re sending money to “friends or family,” PayPal does not offer any protections, nor does it offer FDIC insurance.

Venmo vs. Zelle

Zelle was the big banks’ answer to Venmo, and because of that relationship, transfers are usually received within minutes. This is an advantage over Venmo where transfers can take one to three business days. This is assuming, of course, that the user receiving the cash is enrolled in Zelle. At least one participant in the transaction must have a bank account that is directly connected to Zelle to use the service. The list of banks and credit unions who use Zelle can be found here. If a user is not already enrolled in Zelle upon receiving cash, it can take one to three business days to see cash in their account, the same time it takes for Venmo transfers. Since Zelle is backed and directly integrated with major financial institutions, Zelle does not offer FDIC insurance because a user's bank already has such protections in place.

Venmo vs. Google Wallet

Google Pay Send (formerly known as Google Wallet) withdraws money from a customer’s debit card or bank account. Received money can be transferred to a user’s bank account from within the app. The platform does NOT support payments made using credit cards, PayPal balances or prepaid cards. But Google Pay Send transfers are fast, usually instant when using a debit card. If a Google Pay Send account is attached directly to a bank account, processing time can take up to four days to send money, and two to three days to receive cash.

Another advantage is that Google Pay Send covers 100% of all unauthorized transactions as long as the user lives in the U.S. and has a U.S. address attached to the account. It can be used via desktop or mobile app.

Venmo vs. Square Cash

Payments made using Square Cash withdraw first from the user’s balance within the app before withdrawing from the user’s preferred payment method. A user can then “Cash Out” and transfer money to their debit card or bank account from within the app. Square Cash links to a bank account, debit card or credit card (for a 3% fee). Square Cash only accepts American Express, Mastercard, Visa and Discover debit and credit cards.

Square Cash recently added a feature where users can buy and sell Bitcoins using their Cash App balance. Cash App does not currently offer FDIC insurance.

Venmo vs. Popmoney

Popmoney, like Zelle, allows users to directly transfer money between bank accounts.

Unlike other peer-to-peer payment apps on this list, it does not have a stand-alone app because its platform integrates directly with existing mobile apps for participating banks. It can also be used via Popmoney.com. Users can send money via a bank account or debit card. Recipients must then accept payment before money is deposited into their account. There is also an auto-deposit feature that can be enabled.

Popmoney sends a one-time activation code to users in order to verify that person’s email or phone number associated with the account.

Venmo vs. Circle

Circle users can fund their account by linking a debit card or bank account. To receive money, users must “Cash Out” from within the desktop or mobile app. Circle does not accept credit cards at this time. Circle supports transactions outside of the U.S. including the U.K. and other European countries.

When using Circle, payments and transfers from a linked debit card appear instantly; however, transfers and payments from bank accounts can take one to four business days to arrive.

Circle offers a high level of security, including FDIC insurance, multifactor authentication and encryption of users’ personal information. The platform is regulated by FinCEN.

Venmo vs. Facebook Messenger

Facebook Messenger offers users a way to pay within the Messenger app itself. Users can connect a U.S.-issued debit card or PayPal account to their Messenger account, and send and receive money. Sending and receiving money via Facebook Messenger is instant; however, it can take up to five days to see money posted in your bank or PayPal account.

Payments made by Facebook Messenger are free, but the service does not accept prepaid cards or credit cards.

Users paying for the first time with Facebook Messenger may be asked to verify their identity. Facebook also offers multifactor authentication and added PIN security. It’s important to note that Facebook Messenger does NOT allow users to accept money for their businesses via Facebook Messenger. Facebook is not liable for any payments made within the app.