You’ve probably heard of mobile payment app called “Venmo“, but if you haven’t, you should because it will make your life a whole lot easier, especially if you go out with friends a lot. Venmo is probably the most popular P2P app. According to EMarketer, over $21 Billion was sent using the Venmo app in the first quarter of 2019 which represents an increase of 73% over the same period last year. Venmo is so popular that the term “venmo me” is part of our lexicon just like uber or google.
Social Networking Aspect to Payments:
Venmo first became popular with the younger generations because of its social networking bent; that is, Venmo allows users to share their payments and comments complete with emojis to its own social feed. This allows others to comment as well; Venmo encourages interaction between its users by setting the level of privacy to a default setting of “public”. Thus, all comments that are “public” are available for anyone to see in Venmo’s own social feed world. Dan Schulman, the CEO of PayPal, which owns Venmo, believes that the social interaction involved in using the Venmo app takes the transactional nature of “payments” out and makes it more of an experience, and an easy one at that.
“…the thing that makes Venmo unique is it’s not a payment transaction, it’s kind of an experience. And what I mean by that is 90%-plus of all Venmo transactions are open to somebody’s friend, network, and 90%-plus have some sort of emoji or written commentary on that transaction. So, if I want to see what you’re doing, who you’re dating, what you did, I can just go into your Venmo feed and see it. And there is like…and everybody shares. So, it is not a payment transaction but an experience for people….” Schulman noted in 2017.
These social interactions thus drive greater user engagement. According to Schulman, the Venmo app is opened multiple times each week just “to see what their friends are doing”. Like Instagram where the younger generations follow each other to see what their peers are doing, Venmo is similar and its addictive nature helps checking your Venmo feed a habit. Tip: While this social posting maybe popular with the younger generations, it more likely that the 40+ prefers to keep their transaction private. So, make sure to go into settings and change the default “public” setting to “private”.
How Venmo Works:
- Creation of Account: Users can create an account via downloading a mobile app or on the website; it requires providing basic information and bank account information and allows personalization with a profile picture. Recipients of transactions can be found through phone number, Venmo username, or email.
- Source for Payment: Users have a Venmo balance that they can use in their transactions. They can link their bank accounts, debit cards, or credit cards to their account. If a user does not have enough funds to pay for a transaction, Venmo will automatically withdraw the necessary funds from the registered bank account or credit card. Alternatively, Venmo created the Venmo MasterCard which is a debit card that allows its users to make payments, offers overdraft protection, and offers ATM access. Important to note is that transactions paid with a bank account or the Mastercard debit card are free; for credit cards, there is a 3% fee.
- Process of Transferring Money: You can send payment through Venmo’s mobile app which is very simple: (1) In the top-right corner, select Pay/Send option; (2) Select the recipient by their username, phone number, or email address; (2) Fill out the amount you’d like to send; (3) Add a “note”; (4) Determine who can see your payment; and (5) Tap “Pay”.
Some Important Tips:
- If Your Recipient is Not a Venmo User: If your recipient is not a Venmo user, she will have to set up a Venmo account to receive payment. If she doesn’t set up a Venmo account, then you will need to take back the funds under “Incomplete” in the Venmo app.
- Add “Note” is Required: In order to encourage social interaction, Venmo requires that you add a note even if it means writing the word “nothing”.
- Venmo’s Default for Privacy is “Public”: As noted earlier, the younger generations like the Millennials love Venmo for its social interactivity alá Instagram where they can follow fiends, other users; and comment or like a transaction. Chances are you would prefer being more discreet and private. So, make sure to change the default setting for privacy to “Private” (or if you don’t mind your friends seeing your transaction, then set it to “Friends”). Once a transaction is made through Venmo, depending on your “privacy” setting, any stranger can see your transaction on the “worldwide” Venmo (the payment amount is stripped and not made visible) if your setting is on “Public”, or just your friends if set on “Friends Only”, or not shown at all if your privacy setting is “Private”. Of course, both you and your recipient will see the transaction. If there is a different level of security between the two participants, the more restrictive privacy setting is used.
- Venmo Funds are Not Cleared for a Recipient for 1-2 Business Days: Since 2008, cash transfers are not instantaneous and could be cancelled after an initial transfer. Unlike some other payment apps like Zelle or CashApp which provide almost instantaneous transfer, Venmo funds are not cleared and released until 1-2 Business Days unless users pay a 1% of transaction fee to expedite to instant transfer.
- Instant Transfer Option for a Fee: In 2018, Venmo began offering its users an expedited transfer of Venmo funds to either a bank account or a Mastercard or Visa debit card for a fee of 1% of the transaction value (with a minimum of $.25 and maximum of $10 per transfer). The Instant Transfer is completed in about 30 minutes.
- Security: For many years, Venmo claimed that its security was “bank-grade”, and that financial data is encrypted and protected on secure servers to guard against any unauthorized transactions. However, several journalists, the California Department of Business Oversight, and the Federal Trade Commission disputed this claim. In 2018, Venmo settled with the FTC after an investigation revealed that Venmo’s security was not “bank-grade” and did not comply with Federal Laws for safeguard and privacy of its users. Although Venmo encourages users to set up a PIN to increase security, it’s important to note that there is always a chance that your data may be breached.
- Only Available in the U.S.: Venmo is only available in the United States. It’s important to note that mobile payment apps differ on an international basis. For example, over 600 Million people in China uses “WeChat” to make money transfers. For more information on international payment apps like WeChat, go to resources such as Fodor’s or Wiki Voyage.
Before you decide to download the Venmo app, read on and see if any of the other major mobile apps like Zelle, or CashApp maybe a better fit.