One of the major reasons to use Venmo is that it is readily availible for anyone with access to a computer or smartphone looking to make payments or receive funding. In addition to the reputation earned from its parent company -PayPal, Venmo continues to remain as the highest-profile P2P (peer-to-peer) mobile-based payment app around the world.
The platform is renowned for simplifying the payment processes and transactions between peers -converting the process into a form of social collaboration. Some of the latest news regarding Venmo is the launch of the Venmo Card, which is a debit card that allows users to access their venmo balance account funds at respective stores and ATMs.
What is Venmo?
Venmo was launched in the form of a P2P (Peer-to-peer) free payment application available for Android and iOS phones. The service continues to remainin free however some of the specific services offered by the platform might carry a fee.
With Venmo, it is possible to instantly send as well as receive money. You can choose to send money from your credit card, debit card, bank account, or even your Venmo balance. Upon receiving money, it gets added to your total Venmo balance. You can consider keeping the amount within Venmo, or transferring the funds to your bank account.
With Venmo, it is also possible to split bills along with other expenses with different people or groups. For instance, you and your roomate could potentially use Venmo to split your rent or pay the internet bill.
One of the most crucial aspects of Venmo is that it helps in adding a social media element to the process of transferring money. Venmo users are capable of adding each other in the form of friends. There is a dedicated feed revealing payments made between users. On every payment, it is possible to include emojis, a note, or even animated stickers. Venmo also comes forth with privacy settings. If you do not wish anyone else to see your payments, you can make the payments visible to only friends or only you and the recipient.
How Does Venmo Work?
Once you have downloaded the Venmo app from the Google Play Store or Apple Store, you are provided the option to link the Venmo account to your credit card, checking account, or debit card. Once you have enrolled as a Venmo user, you can start exchanging funds with any Venmo user right away.
For P2P transactions, Venmo serves to be a middleman between the accounts of both the users involved in the transaction. Therefore, Venmo essentially acts like the virtual ledger responsible for representing funds within the Venmo platform. Until Venmo has transferred the entire amount into the bank account of the recipient, it is technically not in the possession of the users.
Sending or Requesting Money with Venmo
Money can be requested or sent by tapping the request or pay button in the mobile-based app of Venmo. After you are required to enter the details of the other party -including phone number, username, or email address. When you are receiving funds, you can decide to either keep the cash in the balance or transfer it to your linked debit card or bank account. When you make use of Instant Transfer instead of conventional delivery, it will incur some fees.
Money is added to the respective Venmo account from the debit card or the bank. It is possible to process payments through the Venmo app without having the desired amount of funds in your Venmo balance. If the payment amount is exceeding the ongoing Venmo balance, the money will be obtained directly from the linked bank account. If the transfer amount turns out to be equal or less than the available balance, the money in your balance will be used.
There is no fee for processing payment with a debit card or linked bank account, however you will incur fees when using a credit card to process payments.
What are Venmo Rates or Fees?
When you open a Venmo account, it is completely free of cost. There is no involvement of any monthly fees.
When you ensure a simple Venmo transaction with the help of your bank account, Venmo cash balance, or debit card, it is made free of charge. When you make use of credit card for payments, Venmo will be charging the senders a fee of 3 percent of the amount. There are other services as well that carry some charges.
- Instant Transfer Fees: It is possible to conduct Instant Transfer of money from the Venmo account to any other bank account in the United States or a participating credit card account. It incurs a fee of 1.75 percent. In this case, ‘instant’ implies that the transaction is completed within 30 minutes or even less. It is possible to avoid the given fee by selecting the standard payment option. It is available for free and will take around 3-5 business days to complete.
- Credit Card Charges: In 2021, Venmo had introduced its own credit card line. It is available with a variable, yet steep interest rate -like most other credit cards out there. As per the current scenario, the interest rate charged is around 11.99 percent to 20.99 percent. It will ultimately depend on the respective credit rating of the individual.
Cash advances are known to cost more -around 5 percent or $10 of the requested amount. Balances on the respective cash advances feature an APR of 20.99 percent along with the current prime rate. The credit card by Venmo is available with the unique cashback feature -3 percent of the category of ‘top send’ along with 2 percent on the most-used category and one percent on everything else.
- Debit Card Charges: The debit card by Venmo, issued in partnership with MasterCard, is completely free of any miscellaneous fee -in contrast to the fee charged by some of the card issuers. ATM withdrawals from Venmo debit cards are also available for free. It is made available through the MoneyPass network. However, it will cost around $2.50 for the ATM that is out of network.
Currently there are no monthly or annual fees, interchange fees, or processing fees. However, merchants are expected to pay the transaction fees.
There are more than 1000 negative reviews about Venmo on different portals. Some out there even accuse the company of being a big-time scam. A majority of user-centric complaints regarding Venmo are linked to issues like unexpected and sudden funds-hold placed on the Venmo accounts of the users. It is usually due to the payment activity that Venmo had flagged as fraudulent.
To some extent, some usersalso complained that their payments were delayed or lost due to errors related to the account set-up process or even unauthorized use of the account. Venmo is primarily intended at delivering and receiving personal payments. Therefore, users should avoid executing large-scale business transactions with the help of the personal app. Some of the additional complaints include getting annoyed with the social media integration of the platform along with issues related to isolated customer service incidents.
Venmo Fines and Lawsuits
During March 2018, Venmo had gone ahead with settling the FTC complaint. The complaint alleged that the company had failed to reveal material-specific information about the availability of funds of the users. Additionally, the lawsuit challenges different aspects of the security and privacy practices of the company. The proposed settlement will require Venmo to ensure clear disclosures about specific business practices.
In 2021, the CFPB or Consumer Finance Protection Bureau made an announcement regarding investigations into the collection practices by Venmo. As per a statement, the company has threatened dispatching debt collectors on users overdrawing their accounts -even when the users were victims of a scam.
In 2022 again, the company witnessed a class-action lawsuit of around $58 million on Plaid -a company Venmo uses to verify bank account information. The suit had been put forth due to alleged unfaithful information collection that went against the law.
Understanding the Social Aspect of Venmo
Venmo has been successful in dominating the P2P payment domain by ensuring transfer of funds along directly from user to user. Users are capable of including descriptors with the exchange of funds with the help of emojis and notes for describing payments or requests. This can help take away the awkwardness of asking your friend or anyone else who might owe you money by combining the financial and social elements.
Throughout its existence, Venmo has grown to become one of the most famous P2P payment platforms out there. Due to this, they are rapidly branching out to merchant services and in addition starting to offer their own credit card.