Venmo is a peer-to-peer payment app owned by PayPal. Whether you’re a Venmo aficionado or considering opening an account, here’s what you need to know, including fees, security, privacy and card use options.
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In person-to-person payment services, Venmo is a brand name.
And for some consumers who live on their phones, it’s also a verb. The service processed more than $26 billion in payments during the first half of 2018, according to PayPal, which owns Venmo.
But if you’re using or considering P2P payment services, does Venmo have what you need? Here’s everything you need to know about Venmo.
A 12-step guide to Venmo
- How does Venmo work?
- How much does it cost to use Venmo?
- How long does it take for a Venmo payment to arrive?
- Is there a limit to how much money someone can send through Venmo?
- What happens if I send a Venmo payment to the wrong person or for the wrong amount?
- Is money in a Venmo account FDIC insured?
- Are Venmo payments protected against loss, fraud and theft?
- What happens if I don’t have enough money to cover a payment?
- Can I earn rewards points or cash back if I link my Venmo account to a rewards credit card?
- Are Venmo transactions public?
- Does Venmo offer its own cards?
- Do I need extra security while using Venmo?
How does Venmo work?
To start using Venmo:
- Download the Venmo app for iPhone or Android, or go to Venmo.com.
- Create a Venmo account.
- Link your account to a funding source: a bank account, debit card or credit card.
To receive money:
- Give the sender your Venmo user name or the email or phone number associated with your Venmo account.
- Alternatively, you can also share your Venmo scan code from the app – or text or email the scan code to the sender.
- The money will land in your Venmo account.
To send money:
- Money you send will be pulled from your Venmo account.
- If the account is empty or doesn’t hold enough to cover your purchase, Venmo will draw the total purchase amount from the funding source you’ve linked to your Venmo account.
Both the sender and the recipient have to have a Venmo account.
You can also use Venmo for some in-app purchases, such as for food, clothes or tickets, according to the Venmo site.
If the recipient’s details are not correct, your transaction could be flagged. “The system will automatically flag the sender [by showing an additional screen], when we have reason to believe they might be transacting with the wrong user,” says Erin Mackey, a Venmo representative. “The flag is based on information Venmo has that indicates the sender and recipient, both of whom must hold Venmo accounts, don’t know each other.”
How much does Venmo cost?
- Setting up a Venmo account and receiving money is free.
- Sending money is also free if you link your Venmo account to a bank account or debit card.
- If you link your Venmo account to a credit card, purchases are free, but there’s a 3 percent fee every time you send money or fund your account.
- Standard transfers from a Venmo account to a bank account are free, but might take a few days.
- You can transfer your Venmo balance to a bank account within up to 30 minutes using “an eligible Mastercard or Visa debit card.” That service has a $0.25 flat fee for each transfer.
How long does it take for a Venmo payment to arrive?
- If the recipient has an existing Venmo account, the money could arrive in a Venmo account anywhere from a few hours to a 1-2 days.
- If the person receiving the money has just set up the account, it could take a few days, according to the Venmo site.
Is there a limit to how much money someone can send through Venmo?
- When you first open a new Venmo account, the weekly limit on transactions is $299.99, according to the Venmo site.
- After your identity has been verified, the weekly cap for sending funds is a “rolling limit” of $2,999.99, according to the site.
- Some other types of transactions may have different limits.
- Also, you’re capped at 30 retail payments daily, according to Venmo.com.
What happens if I send a Venmo payment to the wrong person or for the wrong amount?
Once you send money via Venmo, it’s gone – Venmo payments cannot be canceled.
- If you send the wrong amount or to the wrong person, Venmo recommends you ask the recipient to return it – with one exception: If the recipient doesn’t have a Venmo account, you can cancel the payment.
- If you don’t hear from the person who received the funds by mistake or need help sending a charge request, Venmo suggests to contact their support team.
Consumer advocates believe that consumer errors are already covered in the Electronic Funds Transfer Act.
“We’re asking the Consumer Financial Protection Bureau to clarify that,” says Christina Tetreault, staff attorney for Consumers Union. “Bank or non-bank, it doesn’t matter – every consumer should have that protection. The law requires that consumers be made whole.”
- You could have recourse with your bank, too, depending on its policies, says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League.
- You may also have chargeback rights if you use a credit card.
Because policies vary and because the money goes through a Venmo account first, talk to your bank or credit card issuer ahead of time.
Ask specifically what kind of protections they will offer if you link their product to a Venmo account.
- Will they offer chargeback protections if you make an error in sending money using your credit card?
- Do they cover you if you sent the money, but the transaction was for goods that turned out to be bogus?
- Do they only protect you if the account was hacked and the money was stolen?
Is money in a Venmo account FDIC insured?
No. Venmo accounts are not insured by the Federal Deposit Insurance Corp.
“If you have money in your Venmo account [versus withdrawing it directly from your bank] and something happens with your account, there are no protections for you to be able to recover the money,” says Charity Lacey, vice president of communications for the Identity Theft Resource Center.
In May 2018, Venmo’s parent company, PayPal, reached a settlement with the Federal Trade Commission “over allegations that its Venmo peer-to-peer payment service misled consumers about their ability to transfer funds to external bank accounts and control the privacy of their Venmo transactions.”
Are Venmo payments protected against loss, fraud and theft?
Under new rules set to take effect next year, Venmo payments fall under the Electronic Funds Transfer Act, says Lauren Saunders, associate director of the National Consumer Law Center.
These are the same regulations that cover debit cards. In cases of unauthorized charges on your Venmo account, if you report the problem to Venmo promptly – say, within 60 days – you are protected.
However, this most likely won’t cover instances of fraud where you sent the money – only instances where someone else accessed your account without your knowledge or permission.
If you sent money via Venmo for something that turns out to be a scam (fake tickets, faulty merchandise, etc.), Saunders argues the authorization should be considered fraudulent as well. However, “that transaction is not covered under law,” says Tetreault. “You’re out the money.”
What happens if I don’t have enough money to cover a payment?
Venmo’s model gives you the ability to pay someone instantaneously. But unless you already have money in your Venmo account, it takes a couple of days for money to transfer from your bank. In the meantime, Venmo foots the bill.
If Venmo doesn’t receive the money, the company can take action to recover it. In a December 2018 update to Venmo’s user agreement, this includes seizing money in other PayPal accounts and reporting delinquent users to a collection agency. This can happen if both your Venmo account and your connected bank account do not have the necessary funds to cover a payment – even if you cancel a payment due to a user error or scam.
According to a report in The Wall Street Journal, one couple canceled a payment through their bank after finding out that they had fallen victim to a scam. But Venmo had paid the person who scammed them anyway, putting a negative balance on their account. Only after contacting executives at their bank and PayPal – and speaking to the Journal – did they get the negative balance removed from their account.
See related: Zelle guide: How to send, receive money using Zelle
Can I get rewards or cash back if I link my Venmo account to a rewards credit card?
If your card offers rewards on regular purchases, you might. However, before you even look into this, do the math.
- The fee for using a credit card to fund a Venmo payment is 3 percent every time you send money or load your account.
- Unless you’re getting more than 3 percent in rewards, you’ll be paying more than you’re earning.
If you have a card or loyalty program account that gives you 5 or 10 percent for a place you patronize frequently, such as a car service or the local pizza place, call the card issuer or program owner and find out how it treats Venmo transactions – especially at the specific locations where you plan to use it.
See related: Best rewards cards for paying monthly bills
Are Venmo transactions public?
- Venmo is a hybrid of a peer-to-peer payment system and a social media network.
- Unless you change your privacy settings, your transactions (minus the dollar amount), are visible to all, says Lacey. The default setting is “public,” so, pay special care to privacy settings when you set up your account, she advises.
- You can shrink that audience to just your network of friends, or shrink it even further to just the sender and recipient.
- You can change the privacy settings for each individual payment or purchase, or for your whole account at once.
- To update your privacy settings, log in to your Venmo account and go to “Settings” and then, “Privacy.”
Does Venmo offer its own cards?
Starting in June 2018, Venmo began issuing its own branded Mastercard debit card.
“Venmo card funds are pulled directly from a user’s Venmo balance,” says Jaymie Sinlao, communications specialist for PayPal, which owns Venmo. If a user has the setting ‘Reloads’ turned on, the linked bank account will act as a funding source for reloading the card if there are not enough funds in the user’s Venmo balance to cover a purchase.
Venmo doesn’t offer a credit card.
Do I need extra security while using Venmo?
If you’re going to send and receive money from your phone, you have to treat the device like the wallet it really is.
“Now you have your bank account information saved in an app,” says Lacey.
She suggests making sure you keep your device really clean:
- Have an anti-virus and malware detector on your device.
- PIN or password protect your device.
That way, if you put your device down, “someone can’t say, ‘let me transfer that to myself,'” she says.
You can also take some Venmo-specific steps.
- You can choose to require multi-factor authentication and/or a PIN to access your Venmo account.
- If you lost your phone you can cut off its access to Venmo. Look for the “Security” tab on your Venmo account’s settings and remove the session associated with your phone. When you remove the session, you’ll be signed out of the app on your phone.