What is Venmo and is it Safe to Use?

A look at the popular mobile payment app

Woman using Venmo on smartphone
Photo: iStock

Founded in 2009, Venmo is a mobile app that lets people easily transfer money between friends and family, rather than opening their wallets and pulling out cash. Even if you're not using a mobile payment app like Venmo now, your friends probably are, and sooner or later they'll send you a request or payment. "Just Venmo me." Download the app, and you'll get your money. (Resistance is futile!)

Venmo is undoubtedly convenient, and it offers industry standard security, but, like any app or software that deals with finance, it's not impervious to scams and fraud. 

How Can You Use Venmo?

In general, you can use Venmo in two different ways:

  • Pay back friends and family for shared expenses
  • Purchase products or services from Venmo partners

Examples of how you might use Venmo include:

  • Sending your roommate your share of the rent
  • Requesting your friend's share of the bar tab
  • Paying for takeout ordered from a food app partnered with Venmo
  • Other non-business payments with people you know and trust

Whatever you use Venmo for, start by linking your bank account or debit or credit card, and then you can quickly send and receive payments to or from anyone you know who uses the app. You can also send payments and requests to non-users, who will then be prompted to sign up. You'll get a notification if they sign up, but of course, if they don't, you'll have to collect or send the money using another method. (Being an early adopter isn't easy.)

Setting Up Venmo

When you first sign up, your sending limit is $299.99. Once you've successfully confirmed your identity by providing the last four digits of your SSN, your zip code, and date of birth, you'll be able to send up to $2,999.99 per week. Venmo is free if you send money from your bank account, debit card, or Venmo balance. If you send money using a credit card, Venmo charges a three percent fee. There are no fees to receive cash or use Venmo to make purchases in apps.

Once you're set up, you can use Venmo nearly any way you like: pay a friend back for dinner, send your roommate your share of the cable bill, or request payments from friends or family for a shared Airbnb or HomeAway rental. Be sure to only use Venmo with people you know and trust. While PayPal owns the company, it doesn't offer the same purchase protection. So if you're selling something online to someone you've never met, it's best not to use Venmo for the transaction. Stick to PayPal, Google Wallet, or other services that offer protection from scams and can aid you in cases of non-payment.

Mobile App Payments and Social Media

You can also connect your Venmo account to partner apps such as Delivery.com and White Castle. Then you can use Venmo to pay for purchases using those apps, and even split bills for cab fare, food, or other shared expenses. Mobile businesses can add Venmo as a payment option at checkout, much like you can already pay with Google Pay, Apple Pay, Samsung Pay, and PayPal, in addition to inputting a credit card.

Venmo also has a social media side to it, which is optional. You can make your purchase public, broadcasting it to your network of Venmo friends, who can then like and comment on it. You can also sign up for Venmo using your Facebook credentials, which lets you find friends who are using the mobile payment platform.

Risks of Using Venmo for Mobile Payments

Venmo automatically uses multifactor authentication when you use the app from a new device, which helps prevent unauthorized logins to your account. You can also add a pin code for extra security.

There are, of course, risks involved with using Venmo including:

  • Scams when transacting with strangers, including false claims and reversed transactions
  • Non-payment from strangers for products or tickets you've sold and shipped to them
  • Lack of buyer and seller protection in cases of fraud or non-payment
  • Security breaches and fraudulent transactions on your account

There's an easy way to avoid the first three risks, above: don't talk to strangers. We can't stress enough how important it is to use Venmo only with people you know and trust. While you can reverse payments on Venmo, it can be done only with the permission of the other user, as long as that user hasn't already transferred those funds to a connected bank account.

Unlike PayPal, its parent company, Venmo doesn't offer buyer or seller protection, so if you don't get paid for something you've sold and shipped, you're out of luck.

It's important to understand that while receiving payments on Venmo appears to be instantaneous; it takes a few days to process. In essence, Venmo is temporarily lending you the balance until the bank clears the transaction. It's similar to when you deposit a check, even if you can access the funds right away, it doesn't clear for a few days. If the check bounces, your bank will remove the funds from your account, even if it's days or weeks later.

Avoiding Fraud

To keep your account safe from fraudulent transactions, change your password regularly and don't use a password you use elsewhere. Use a pin code and check your Venmo activity as carefully as you would a bank or credit card statement. Report instances of fraud to Venmo and your connected bank or credit card account immediately. Implementing all of these practices will keep your money safe.