What is Venmo and How Does It Work? 4 Safety Tips You Need to Follow

“People in their 20’s,” “Young adults in their 20’s”

They’re using it to pay each other back for things they’ve purchased online.

People use Venmo to transfer money from person to person.

Some people like to use Venmo to pay someone back for something they bought online. But others just use it to send money to friends and family members. Either way, it’s pretty cool.

If you want to know more about Venmo, this article is for you.

What is Venmo, and How does it Work?

The revolution in trading has started. Physical money is now old times. Going cashless is both safe and modern.

The analysis of money spent has become easier because of numerous payment applications. 

Online payment methods allow you to keep track of your money like – where you have spent your money?

It calculates total money spent and gives many beneficiaries like coupons and discounts codes. 

But you have to choose wisely for the application you use for online money transfers.

In the era of technology, information is the key to everything. You have to choose trustworthy verified applications, and you can use them safely for money transfers. 

Venmo is a payment application that is available for both Android and iOS. This application is a well-known application for the exchange of money.

It enables its users for easy and quick exchange of money directly. 

Statistics

  • In 2021, 82% of Americans used digital payments, up from 78% the previous year and 72% in 2016, according to a McKinsey & Co survey. (forbes.com)
  • These include: A 3% fee when you use your credit card to send money to someone (forbes.com)
  • A 1% fee (with a $5 minimum) for using the check-cashing feature for faster deposits of payroll and government checks (forbes.com)
  • There’s a 1.5% fee (with a minimum fee of 25 cents and a maximum fee of $15). (forbes.com)
  • In October 2020, Venmo introduced a QR code-equipped Visa credit card providing 3% cash back on purchases. (forbes.com)
  • Sending money over Venmo triggers a standard 3% fee, but the company waives that expense when the transaction is funded with a Venmo balance, a bank account, or a debit card. (investopedia.com)

What is Venmo

what is venmo

Venmo was founded in 2009; it was developed as a text messenger application for payment delivery systems.

Later in March 2012, it was upgraded for a platform with an integrated social network to capitalize on the P2P economy.

After this upgrade, Venmo was acquired by Braintree for $26.2 million. Braintree is a mobile-based application system utilized by Uber, Airbnb, and other eCommerce giants. 

After some time, Venmo had a significant boost when Braintree was acquired by PayPal Holdings Inc. for $800 million.

This gave massive user growth to Venmo and was rapidly monetized by Paypal itself. 

Venmo Working Process

Firstly, install the mobile application of Venmo on your phones, post installing, link your Venmo account to your Credit/Debit card, or link to your bank account.

Venmo allows you to start the exchange of funds instantly to one another.

Venmo works as a middleman between bank accounts of two users commencing a payment transaction.

For example – Let a shopkeeper is selling his good to his customer. The customer buys his goods at $100 instead of transacting with his customer’s bank account.

The customer sends the funds to the shopkeeper via Venmo, which raises the shopkeeper’s account by $100 and reduces the customer’s account by $100. 

This is an example of a virtual ledger by Venmo that represents funds trading hands.

Venmo takes a bit to transfer the balance into the recipient’s account until the transaction is settled; the money is not technically in that user’s possession. 

Venmo allows its users to pay as well as to request funds. Money can be sent via tapping on the pay button, and the same can be requested via tapping on the request button.

While sending the funds, you have to enter the email address, username, and phone number.

And for receiving, you can keep the funds in your balance or transfer them into your linked bank account. 

Venmo also allows you to add balance from your bank account as well as from your debit card, UPI payment, or other payment sources.

It acts like your Venmo wallet, your pay anywhere and anytime without any server issue. 

Considering a condition where you pay more than your balance in Venmo account. What if you want to pay more than you have in your Venmo account. Then Venmo will add funds from your linked bank account.

Conversely, if you pay equal or less than your available balance, the funds stored in your Venmo account will be used. 

Time Taken for Money Send / Receive via Venmo

what is venmo

There is an immediate addition and deduction in the recipient’s bank account and the senders’ funds.

No such timer taken is present in the procedure. The transfer speed may vary; it depends on whether you are willing to pay fees. 

In general, the amount transferred to your account shows an immediate effect.

But in some cases, it takes three to five business days to deliver the added amount to the bank account.

Conversely, the transfer of money in the opposite direction may take three business days. 

If you are in a rush to transfer money out, an instant transfer is an option. This feature takes a maximum of 30 minutes to complete the transfer.

Venmo takes a 1.5% fee for this option of quick transfer. 

Venmo Market Value

Venmo is a ruling brand for the P2P payment market.

It made the transfer of funds an exciting and fun exercise that includes the jazz-up exchange by using emojis to describe the traded time. 

This feature takes out the awkwardness from the payer to pay back their portion of the bar tab, marrying the financial and social elements. – says Venmo spokesman Josh Criscoe. 

Venmo Transaction fees

By the Venmo Officials, there are no such transaction fees for sending and receiving money from the platform if the money funded is from your Venmo balance, a debit card, or a bank account. 

But transaction financed from the credit card triggers a standard fee of 3%, which has to be originated by the card company itself and transferred to Venmo by consumers. 

Measures of Charges by Venmo 

As you read above, most of the transaction method does not allow any fee charges likewise – while signing up for Venmo; you don’t have to make any payment to use the application.

Venmo does not cost any fees to download the application. 

But to be in the market, Venmo has to make a way to make revenue for survival.

The owner has to make money; for this charging, a transaction fee is an option to opt, just like other credit card issuers and most financial institutions. 

To understand how and what is a transaction has transaction fees read below – 

  • Instant Transfer Fees –

Venmo allows you to transfer money from your Venmo account to your bank account.

But if you are in a hurry and want immediate your transferred money-out, you have to pay for the instant transfer.

You can use the instant transfer features to transfer your money to your linked bank account in 30 minutes by paying 1% of the total transfer or 25 cents, whichever amount is higher. 

You also have a Venmo debit card is issued; you can use it to access your money right away without paying any fee. 

  • Credit Card Processing Fees –

Several people use their bank accounts or debit card to make Venmo transfers. 

But if you are using your credit card for any transaction, you have to pay a 3% processing fee. These fees are not actually Venmo Fees; it is from the credit card companies. 

  •  Merchant Fees –


All the merchants using the payment method by Venmo has to pay transaction fees for every transaction.

This fee is 30 cents and adds a 2.9% fee to the total transaction.

This fee is applicable for both merchants who accept Venmo debit cards as well as merchants who accept smart Venmo payment methods.

  • Overall Costs Rundown – 

The overall cost Rundown fee is relatively small and is avoidable by most of the users unless you are a merchant. Also, if you are not using any credit card for any transfer and do not use instant transfer, Venmo takes no charges. 

Is Venmo safe to use?

what is venmo

Venmo also comes with risk factors like other payment platforms if you are not an attentive user.

It is known that you will face some risks during any online transaction. But you have similar ways to protect yourself. 

The primary risk is the possibility of hacking into your account and theft. Hackers have different ways to do so.

Also, some scammers can use your Venmo information to get your login information.

But Venmo does not stand alone. It has built-in safety measures to protect your money. The company itself owns many official coders. 

Also, you can use some safety tips like – 

  • Add a PIN to your Venmo application
  • Do not Pile up Venmo Bucks
  • Deactivate the transaction setting from both ends
  • Pay to a limited group of people by Venmo’s application
  • Use Venmo for any purchase from the classified websites only

Questions:

1. How Long Does It Take To Send Money to Your Bank Using Venmo?

The average time required to send money through Venmo is 2 minutes and 30 seconds, according to an analysis by CompareCards.com. This includes the amount of time spent waiting for the recipient to accept the payment and the time needed to confirm the transaction.

2. What Are the Dollar Limits for Venmo?

You can only send up to $2,500 per day, per user. If you exceed this limit, you’ll be charged a 10% service charge.

The limits are different depending on which country you live in. For example, if you live in Canada, you can only send up to C$1,000 per day, per user.

3. What is an alternative to Venmo?

There are alternatives to Venmo. Here are some popular options:

  • Apple Pay
  • Google Pay
  • Square Cash
  • Zelle
  • PayPal
  • Cash App  

Bottom Line:

Over these years, Venmo has become a giant in P2P payment platforms, branching out to merchant services and offering its own debit card.

Venmo offers easy transactions with a simple interface that combines the best aspects of social media.

It also includes accessible online payment services like PayPal. 

Venmo has a friendly interface; its users are still vulnerable to theft and hacks.

To be a safe user, use Venmo with the same cautions you take for other online payment platforms; this includes changing your password frequently and monitoring your transactions. 

If offers all free services for private users to transfer money between private parties, avails the use of credit card and charges a small fee.

Beneficial for businesses as well, it offers the lure of increased visibility with every transaction, with some standard fee. 

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Debashis Konger
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