Venmo is a financial platform acquired by PayPal when it bought Braintree for $800 million in 2013. Venmo has competitors, but its reach is huge and its rise meteoric—especially with millennials and younger. In the fourth quarter of 2018, it processed 19 billion U.S. dollars—that’s 80% growth year-on-year.1 Today, it has as many as 10 million users by some estimates.
The Venmo app is representative of the willingness to embrace a new kind of money system. It represents a willingness to trust gadgets on a whole new level, and a lack of concern for financial privacy.
But users—and you whether you’re a user or not—may not thoroughly understand the platform. And while Venmo might look free at first glance, there are many little Venmo charges you could be paying without even realizing it.
Anytime you use a financial platform, it’s important to know what the possible charges and risks involved are. This lets you protect yourself and can save you money.
If you’re a Venmo user, here’s what you need to know about Venmo and Venmo charges.
What Is Venmo?
Even if you’re not familiar with this platform, you’re likely familiar with platforms like it including Square Cash, Zelle and Google Wallet.
Venmo is a type of peer-to-peer payment platform. It’s a mobile app that enables sending money easily among friends. No credit card, no wallet, no fees and no nagging for unpaid drinks required. Just link the app to a debit card and spend away.
You can use Venmo to send and accept payments to or from other people online. Instead of finding the exact change to pay your friend back for dinner or stiffing him/her, for example, you can simply Venmo him/her the exact amount.
You can also use Venmo to pay for goods and services from some online retailers as well as to make in-app purchases in some online apps.
Some businesses even choose to use Venmo to make payments to freelance employees.
Venmo is somewhat unique in that it’s also a social platform. Unless you change the settings, your transactions are visible to the public, as well as your friends on the platform. You can see who’s sending or receiving money from who, and the notes they include about what the payments are for.
Creating a Venmo account is as easy as entering your email and selecting a username and password or using your Facebook account to create your Venmo account.
Easy of account setup aside, Venmo users can probably learn a thing or two by reading the fine print and chatting with more suspicious types.
A Guide to Venmo Charges
When you sign up for Venmo, you aren’t asked to make any payments to use the app. This makes it seem like Venmo doesn’t cost anything.
For most users, that’s true. Venmo doesn’t cost anything to download and use, which is part of why it’s become so popular. However, the platform still has to make money for its owners. The owners do that by charging transaction fees—just like most financial institutions and credit card issuers.
So you’re in the know, here are some Venmo fees you might encounter for certain transactions.
Instant Transfer Fees
You can transfer money from your Venmo account to your online bank account for free. But if you want that money in a hurry, you’ll pay for it.
You can do an instant transfer from Venmo to your linked debit card in a matter of minutes if you’re willing to pay 25 cents or 1% of the total transfer, whichever number is higher.
However, you can still do a free transfer if you can wait a day or two for the money to go through. You can also use a Venmo debit card if you want to access the money right away without paying a fee.
Credit Card Processing Fees
Many people do Venmo transfers using a linked bank account, debit card or their own Venmo account.
However, if you send money from a credit card, you’ll need to pay a 3% processing fee. It’s not actually a Venmo fee—it comes from the credit card company. And Venmo makes users pay it rather than covering the cost as part of the service.
Merchants who accept payment using Venmo pay fees for those transactions.
They’ll pay a transaction fee of 30 cents, added to a 2.9% fee on the transaction total. This applies to both merchants who accept Venmo debit cards and merchants who accept Venmo payments through a smart payment button.
Overall Costs Rundown
The fees for using Venmo are fairly small. And they’re easy to avoid, unless you’re a merchant. As long as you don’t pay using a credit card for your Venmo transactions, and avoid instant transfers, you can use Venmo free.
Venmo and Your Financial Safety
Venmo can come with costs if you aren’t attentive to your financial safety. Any time you conduct financial transactions over the Internet, you’re taking on a certain amount of risk. But there are ways to protect yourself.
The primary risk of using Venmo is the possibility that someone will hack into your account and use it to steal money from you. There are different ways hackers can do this. It’s also possible for a scammer to get your Venmo information by posing as a legitimate source to get your login information.
Once a scammer or hacker has your account information, they’ll change your password so they have more time to steal from you before you can fix the problem. They can link your Venmo account to their bank and funnel money away from you long before you realize it. They can also prevent you from getting the notifications that might alert you to the situation faster.
Built-In Safety Features and Steps You Can Take
First, you should know the precautions Venmo takes to protect your money.
Some of those features are built in, while others require you to opt-in. Data encryption is the basic level of built-in protection. This makes it harder for anyone to steal your information while it’s in transit.
However, data encryption offers low-level protection that’s fairly easy to circumvent. To protect your money, consider following these safety tips:
- Add a PIN to your app. It’s optional, but there’s no reason not A PIN will stop, or at least slow down, anyone who gains access to your phone from initiating a transaction.
- Don’t pile up “Venmo bucks.”When you’re paid, you can leave the money “on the app” or move it back into your bank account. Move it back. Your money on Venmo is not insured by the FDIC or protected by many banking regulations. Leave a few dollars in there if you like, but there’s no reason to let it pile up to triple digits. Also, Venmo’s terms of service mention you forfeit any right to interest payments by leaving money there, so regularly sweep it into your savings account.
- Deactivate transaction sharing from both sides. Don’t broadcast when you make payments. And disable sharing of “transactions involving you” in the privacy settings. Set your Venmo account to private, rather than the default public setting.
- Pay a very, very limited group of people using the app. Sure, you’ll probably do that at first, but as you get used to it, you’ll probably expand your Venmo friends’ Ask yourself: Will your roommates’ little brother’s cousin really come through with the concert tickets?
- Refrain from using Venmo to buy things from online classified sites at all costs.
Remember, if you’ve overshared and/or have reason to believe your personal or payment information was compromised, keep a close eye on your financial accounts. You may want to also want to monitor your credit scores. A sudden drop in credit scores is a sign your identity has been stolen.
Is Venmo Right for You?
Venmo is popular, but it’s worthwhile to give it—and any other app—some consideration before jumping in.
Venmo charges are low for most users, making it an appealing platform. However, you want to weigh the risks of using any platform. This financial service works well for many people, but it’s not recommended for someone who won’t be vigilant about protecting his/her information.
Looking for more financial safety information? Check out what you need to know about chipped credit cards here.
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