You know how it goes, you’re out with friends, the massive check arrives, and nobody is stepping up to pay. As a person who mainly planned all the things, you offer to settle with the promise of others to pay back later.
We’ve all been there, done that. Splitting the bills is erm.. very awkward. Right?
Not anymore! Just tell them “Venmo me,” and the case is closed because they won’t be having any excuse to give about forgetting to pay back the money.
Now, what’s this Venmo would be your question. Let’s discuss all the information required to know about this amazing app that can save us from unnecessary entitlement.
What is Venmo?
Venmo is the new rage among millennials. It’s a popular free to use peer to peer (p2p) payment app that allows you to send and receive money quickly with just a tap.
It makes the most sticky situation in social get together bearable to split the bills
The app is also trendy like a social media feed in some form.
You can like and comment on the transactions because people normally use studded emojis to represent the reason for their payment.
This app is owned by PayPal connecting the users and small businesses’ accounts with credit cards and debit cards to send or receive funds online.
Is Venmo Social Media?
Yes, in a way Venmo is one form of social media because it has a style like feeds. The news feed has become one of the most informative and interesting social networking sites out there.
You can have an intimate look at how your friends and family are spending money and with whom. Might sound creepy but it’s this weird voyeurism that people need nowadays.
The app is solely for transferring cash but many users have reported using it for other purposes. If you have a weird ex-boyfriend or girlfriend they could keep track of what you’re up to from this site.
Think about it, you can keep intel on your friends unless they choose to keep it private.
Venmo and PayPal
PayPal is the first widely used digital wallet but Venmo is a partly digital wallet and a part social media feed. PayPal acquired Venmo in an $800 million deal.
Paypal offers payment services and also allows large transactions and purchases. A lot of stores and websites accept it as a payment mode for buying goods and services.
Charges include 2.9% with an additional $0.30 as a fee for payments made from debit and credit cards.
Venmo is a payment app designed for payments between family and friends who completely trust each other.
It’s free to use and credit card payments will be subjected to a 3% transaction fee. Transfers from debit cards and user’s balance cost nothing.
For all intents and purposes, Venmo and PayPal share a lot between them. They are both a part of the same company that has a similar fee structure and general format.
Who Owns Venmo?
Venmo is founded by Andrew Kortina and Iqram Magdon-Ismail. The two college roommates came up with the idea, realizing the horribleness of the way traditional sales software works in the process of helping a friend to set up a yogurt shop.
They have an interesting story of the way the Venmo app idea was conceived
Braintree Acquired Venmo for $26.2 million and PayPal acquired Venmo for $800 million.
After the acquisition, it has played a significant role in revenue space, within the first quarter Venmo made $12 million in the transaction.
Yet, the app is feeless, now let’s see how it works.
How Does Venmo Work?
It’s a very simple process, just link your bank account and credit or debit card with Venmo. Transactions made from debit card and bank account is free while credit card attracts 3% fee for the transaction.
You can just request amount from friends or relatives and once the request is sent the person can either deny or accept it. Keep in mind that the sender can remind the person who is charged also.
Once the fund is transferred you can either keep it as Venmo Balance or credit or debit it back to your account.
It has API (Additional Programming Interface) that lets individuals and businesses to connect with payment services.
To know more about the process watch this video of How to Send and Receive with Money for Free?
How does Venmo Make Money?
As the app is free you might wonder how Venmo generates profit right?
Venmo generates profits through transaction fees. Basically, the transactions done through debit card or bank account attracts no charges but credit card transactions have 3% charges. This is one of the ways the app makes money.
Whenever a customer pays through Venmo API, businesses are charged with a 2.9% fee.
To increase revenue in the upcoming years Venmo is planning a partnership with some food companies. It has also partnered with Uber, which increased its revenue. Well, this how Venmo makes money!
1. Venmo Business Model
Venmo’s business model is a peer-to-peer transaction. The customer enjoys the fee-free transactions. It generates income through Venmo API which lets the users pay with Venmo and gets 2.9% from the business fee.
Another chief source of income is 3% from credit card transactions.
2. Social Media and Privacy Settings
By default, the transactions are public in the app like how feeds pop up on other social media websites. You can make it private if you choose to.
In the app settings → privacy section you can change the default option to the private one and also edit the visibility of your past transactions which might make your parents chase you with a bat.
To make the app more secure you can change the app to password-protected one with fingerprints and Pincode.
In the social section, you can connect the facebook contacts and if they have Venmo they will be automatically added to your friend’s list.
It’s also best to switch on some kind of alerts and notification because at least you’ll know if someone hacks your account.
Why is Venmo Free?
Venmo is free to a certain degree making it a free to use platform. Many apps use advertisements as their only way of revenue, but Venmo has avoided this path which is commendable.
When we look into the future, banks cannot reproduce social feeds like Venmo, that’s what it makes special although it might sound pointless and goofy. It’s what sets them apart from the competitors and a significant advantage.
It’s mostly free for individuals but generates revenue through levies on merchants. The company waives the transaction when it’s done via debit card and bank account but subjected to charges (3%) when a credit card is used.
Is Venmo Safe?
Well is it?
All p2p sharing apps which receive and send money are generally safe. Venmo protects the information of the customers with data encryption. It also offers 100% protection for unauthorized transactions.
Suppose if there was an unauthorized transaction, you must report it within 60 days of its appearance in the account.
It’s a general rule to check the account statements regularly. To use Venmo safely, only transfer money to the people whom you trust.
Don’t sell items on these apps, maybe the buyer has stolen a credit or debit card and when the transaction is reversed there’s a high chance you won’t get the money.
1. Venmo Scam
This is where Venmo gets sensitive most of the time. Many times it has been criticized and questioned for its privacy and security issues.
Back in 2016, it faced some repercussions over breaches of security and the Federal Trade Commission investigated it. PayPal settled the issue.
Apparently, the company failed to reveal to the users that the money reflected in their account was still under scrutinization and can be frozen or reversed. This led to fraudulent scammers to use shady funds to buy items.
One example I can give is – a seller sold a pair of $13550 Zebra Yeezys to a buyer but the five-figure transaction disappeared from the face of the earth. Hence the FTC pressured the company to disclose the terms properly.
2. Service and Security
The security and service have a solid customer support background. Nobody can get in touch with Venmo users for requesting passwords or verification code to the account.
If somehow, the security or privacy is breached we can send mail to firstname.lastname@example.org to receive a response from the Venmo team.
There’s also an additional pin code facility when using the app in mobile devices, so you can set the pin code and fingerprints as your password for additional safety.
It’s better to keep the transaction among friends and family, that’s what Venmo is designed for and how it makes money. Read the user agreement before signing up.
How Much Money Does Venmo Make?
Venmo is a popular app mostly generating income from transaction fees. Braintree acquired it for $26.2 million and PayPal purchased Braintree for $800 million.
According to the Moneyish report, Venmo has proceeded with $17 billion transactions in 2016 alone and had $200 million worth of revenue in 2018.
The instant transfer is 50%, pay with venmo is 24% and venmo cards have 26%of transactions.
Venmo’s growth will come at the cost of PayPal’s growth. The bottom line is P2P market is massive it is tremendously striding forward. The industry is growing yes, but there is extreme competition in that arena.
Also, watch this video of How Venmo makes money?
The money Venmo makes completely depends on its user base and expansion in the future.
Venmo has become a casual verb to use among Millennials now. It’s common to see in tweets like “Just Venmo Me”. As reported by CNBC there are 40 million user base and climbing.
If one uses Venmo me verb along with a burger emoji then assume that the gang went out to have some burgers. Unfortunately, it’s only available in the USA now.
It’s taking over the peer-to-peer industry with a thunderstorm.
Some millennials comment that it has eliminated the use of checks in this generation. And they find it convenient to split the bill while having dinner.
Venmo together with other platforms is emerging as a budding branch of the PayPal ecosystem which is enhancing its product offering and making it more suitable for the younger generation.
Overall Venmo is creating a cult in the internet world. It is safe when it is used for sending or receiving money between friends and families.
As long as you use it to split the bills with people you know, all is well. Don’t make yourself vulnerable for frauds keeping your transactions public. You can never be too careful.
It’s not an absolutely perfect app, but Venmo is much better with its security now, so the rest is up to you.
1. Which is better Venmo or Paypal?
Venmo has branched out into traditional banking services but more limited than PayPal. Venmo is free to use making credit payments subject to 3% fee while debit card and bank account transaction feeless. Paypal charges 2.9% + $0.30 for payments using debit and credit cards. Venmo is the superior service compared to PayPal in case of ease of use but in features and demands, PayPal is far more superior.
2. Is Venmo safe to use with strangers?
No, unfortunately, there is a high probability that the money can be reversed or after its credit to the account. Venmo is designed for usage with people whom we trust and make transactions with only close contacts. It’s not created to be used for small businesses or purchases made on craigslist.
3. Can Venmo be hacked?
Yes, that’s the one area where Venmo is considered the most sensitive. It has been repeatedly criticized for its shortcomings in security breaches of user accounts. Hackers can easily change passwords, linked email addresses without the knowledge of the user.
4. Can people see how much you pay someone on Venmo?
No, we can’t see how much amount you’ve exactly paid others. By default, all the transactions are made public for anyone to see. Anybody can see who you’ve paid and had fun with and the reason you paid them too but the amount is not public.
5. Does Venmo add friends automatically?
Yes, if we allow access in the settings, any friends already on Venmo will be added to your friend list. Another option is to link Venmo to your Facebook account.