Venmo Payment Service: How it Works, Fees, Alternatives, Pros & Cons

Venmo is simply a new age digital wallet and payment gateway that allows registered customers to make payments and transfer money via mobile device quickly. We will look at the Pricing, Features, Reviews & Alternatives and even the pros and cons. Now lets go…

Venmo joined the peer-to-peer (P2P) payment platform industry about 13 years ago. And since then, the company has since then put its focus on providing an easy-to-use, secure, affordable system for its teeming users. It also has the potential to be in healthy rivalry with any competitor in the industry and continue to grow steadily in popularity.

It is a subsidiary of paypal. Venmo Apps is available on Google Play and App Store. Your friends and family who wish to split bills, e.g. for movies, dinner, rent, or event tickets etc. can make use of it to make payments easily.

How did we calculate this? Its simple. Going by Venmo reviews gotten from their users, they appreciate the ease and speed at which the platform operates. Going forward, lets look at some of the advantages and disadvantages of the platform are listed below:

Advantages of Venmo Account:

  1. It is very easy to use by everyone
  2. The P2P system has customizable social feed
  3. Much Quicker transfers from one account to another

Disadvantages of Venmo Account:

  1. The Account is only available for people, banks, and cards in the U.S.A
  2. It does not allow it’s users know upfront that their activity is visible in the feed

History About Venmo Payment Platform

As can be seen online, Venmo categorically joined the P2P app industry in the year 2009. It was a creation by college roommates wanting an easy way to send money to each other. Exactly four years later, PayPal took over the payment platform completely. Subsequently, and with its simple foundation and PayPal’s innovative nature, it quickly became very popular among users and widely acceptable among merchants.

How Venmo P2P Works Online

To get started with Venmo is very easy. You can sign up directly from their website, or you can download the App. All you need do is to reside in the U.S and also have a mobile phone that has internet to access the App.

Thereafter, after providing your basic information, you can link your choice bank account(s), credit card or debit card to use for transactions. There is absolutely no need to fund your Venmo account as you can complete payments directly from your funding source. However, any bank accounts you link must also be located and in the U.S.

How To Send Money With Venmo

You can send some money from your linked bank account, credit card or debit card, if you so wish. Similarly, if you the money is in your Venmo balance, that too can be used, as well. Below are easy steps to send money through Venmo:

Step-By-Step Guide to Send Money with Venmo Account

  1. Select “Pay or Request” at the bottom of the app screen.
  2. Type in the person’s name, phone number, email or username. If they are not a Venmo user, they must first create an account.
  3. Type in the amount you wish to send. Add a note about what it is for, such as “shipping” or “service rendered.”
  4. Then, click “Pay.”
  5. The money will then appear in the recipient’s account.

Venmo has news feed that displays the transactions you and your friends make while of course hiding the transaction amount. Apparently, if you would rather keep your spending and receiving to private, just go to the settings and change so it is no longer on display.

How To Receive Money Through Venmo

Since the App is built to send and also receive, when someone sends you money, it will appear in your account balance. Venmo will notify you by way of email or phone notification, depending on your settings.

You have the choice to either leave the money in your Venmo account or to transfer it to your bank or eligible card. As you can use your Venmo balance to go shopping if the need arises, it is not necessary to transfer the money. If you therefore choose to move it, there are two ways to do it. Let’s quickly discuss it:

1. Standard Transfers

Standard transfers travel directly to your bank account via an ACH payment. They can take as much as three days to complete but quite often it takes less than that. These transfers cost absolutely nothing.

2. Instant Transfers

If you need the money faster, you can choose an instant transfer to an eligible debit card. You will typically have your money in a matter of minutes. Meanwhile, as from May 23, 2022 the fee for an instant transfer is 1.75% of the transfer amount or a minimum of $0.25. The maximum fee will not exceed $25.

Sending Limits

When you first create your Venmo account, you will go through a verification process. To protect itself and its members, Venmo has to verify your identity.

During this time, you will experience stricter sending limits, such as the following:

  • $299.99 per week limit on purchases and payments
  • No more than $999.99 per week in bank transfers.

Once you have been properly verified, those limits increase to:

  • $4,999.99 per week limit total on purchases and payments
  • Up to $19,999.99 per week in bank transfers; only $2,999.99 at a time.

Venmo Fees

Venmo is a very budget-friendly option as the fees are minimal. The fees that do exist are optional and be avoided simply by changing your payment and transfer methods.

For instance, Venmo charges you a 1.75% fee for choosing an instant transfer to your bank. You can avoid this fee by choosing a standard transfer. While it may take a little longer, it helps save some good money.

Here’s a more detailed summary of Venmo’s fee schedule.

Opening account$0
Monthly or annual fees$0
Online purchases$0
Sending money from your Venmo balance, bank or debit card$0
Sending money to someone with a credit card3% of the transaction amount
Receiving money from a friend or a refund from a merchant$0
Transferring money to your bank account$0, usually completes in 1 – 3 business days
Instant transfer to your debit card or bank account1.75% of transaction amount; $0.25 minimum up to $25, money is available in minutes
Paypal's Venmo Payment Service

Venmo Debit Card

Venmo has also designed a Mastercard for its users. You can use your Venmo balance to shop anywhere at all that accepts Mastercard. As a bonus, many offers can help you earn cashback when you use your card.

The Venmo card does not come with many fees, either. Learn more with the table below.

Venmo Mastercard Fees

Getting the debit card$0
ATM withdrawals-$0 — No fee when you use a MoneyPass ATM
-$2.50 — Non-MoneyPass ATM
Cash withdrawals at a bank or financial institution$3 per signature withdrawal. If you must do multiple transactions to receive your money, you are charged $3 for each one.
Replace a lost or stolen card$0 — You can quickly freeze your card in the app and then unfreeze it if you find the card. If you don’t find it, you can request another card for free.

Is Venmo Safe?

The short answer is a big YES! Venmo is a very safe P2P platform to use. It has encryption with banks and other financial institutions, and it was created to send money to people you know around you. When used as accordingly, it has little risks.

Additionally, the platform lets you a add two-factor authentication. You can use a pin and fingerprint login to minimize the chances of another person gaining access to your account. Also, if you lose your phone, simply log into the website and update your settings.

Venmo also has Fraud Protection for unauthorized transactions. You have up to 60 days from the date of a transaction to report it.

It is very important to note, though, that you are the best protection for your finances. Even the most secure platforms pose some risk of being hacked into. Make sure to always set up any available security precautions, such as two-factor authentication. Additionally, only send and receive money from people you know so you can reduce your risks of being defrauded.

Venmo Transfer Protection Chart

Standard transfer speed-1 to 3 days
-1 to 3 days for non-enrollees
Minutes for current users1 to 4 days
Instant transfer fees1.75% of transaction fee; no less than $0.25, no more than $25Free for current users1.50% of transaction fee; no less than $0.25, no more than $15
Credit card transfer fees3% of the transaction when sending money; $0 for authorized merchantsNone2.9% of transaction + $0.30
Other fees$0$02.89% fee for sellers + $0.49 per sale
Fraud protectionYes, for unauthorized purchases reported within 60 daysYes, there is protection for unauthorized activityYes, if the payment is made for goods or services

It is very important to note, though, that you are the best protection for your finances. Even the most secure platforms pose some risk of being hacked into. Make sure to always set up any available security precautions, such as two-factor authentication. Additionally, only send and receive money from people you know so you can reduce your risks of being defrauded.

Venmo vs. Competitors

Here’s a summary of how Venmo stacks up against some of its major competitors.

1. Venmo vs. Zelle

Zelle is a P2P feature in over a thousand banking apps, where users can send money to others whose bank is part of the Zelle network.

If your bank is not connected, you can still receive payments through Zelle and transfer your money to an eligible debit card. However, you will have to wait longer for the transfer to be completed.

Zelle does not charge any fees. Your bank or debit card company may charge fees for using the service, though.

2. Venmo vs. PayPal

PayPal owns Venmo, so there obviously, are some striking similarities between the two platforms. One of the biggest is the target market. PayPal is useful to anyone, but it has added many products and services for businesses and professionals. Venmo is a simpler version of PayPal, created for people to easily send payments to people they know.

Final Take

The Venmo payment system is a great choice for individuals looking to send money to other individuals. Thanks to the addition of the Venmo debit card, it is now also an excellent choice for use at various merchants, as well.

Editor’s Note

If you are interested in a simple P2P system that does not charge astronomical fees, Venmo fits the bill.

Paypal Subsidiaries

  • Xoom Corporation
  • Braintree
  • Zettle by PayPal
  • Tradera
  • PayPal Singapore Private ltd
  • Curv Inc.

New Updates You Should Know

Frequently Asked Questions

Here are the answers to some commonly asked questions about Venmo.

If they don’t charge fees, how does Venmo make money?

Instead of charging users, Venmo makes most of its money from businesses that offer it as a payment option. Each time a customer makes a purchase with a credit card, Venmo charges a 2.9% transaction fee to the vendor.

Do payments automatically get sent to my bank account?

No. Any payments you receive will sit in your Venmo account until you initiate a transfer. You don’t have to worry about your money moving without your knowledge or permission.

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