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.
Venmo is one of those brands that’s so iconic, it’s become a verb.
A popular platform for splitting bills and sending money to friends and family, it processed $44 billion during the third quarter of 2020, according to parent company PayPal. During that same period, Venmo had 65 million users, according to Investor’s Business Daily.
And as electronic payment options have gained momentum during the pandemic, so has Venmo.
“We are seeing large increases in the use of Venmo as the pandemic continues on, as more millennials turn to Venmo to live their financial lives,” says Jaymie Sinlao, a global communications specialist for the company. And “older age groups have begun to adopt Venmo as a way to pay safely amidst COVID-19.”
Does the platform offer what you need? Here’s the basic 411 on Venmo.
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 shop with Venmo?
- 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?
- What’s new with Venmo?
- Do I need extra security while using Venmo?
- Why is the CFPB investigating Venmo, and how does that affect users?
How to add money to Venmo
To start using Venmo:
- Download the Venmo app for iPhone or Android, or go to Venmo.com.
- Create a Venmo account.
- You can also link your account to a bank account, debit card or credit card.
To receive money:
- Give your Venmo user name or the email or phone number associated with your Venmo account to the sender
- Or supply them with your Venmo scan code in person or via text, email or AirDrop (iOS only)
- The money will land in your Venmo balance
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 bank account, debit card or credit card you’ve linked to your Venmo account
How much does Venmo cost?
That depends on what you want to do. For example:
- There’s no charge for setting up a Venmo account and sending or receiving money from it.
- There’s also no charge 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% fee if you use the card to send money to an individual. And your card bank may classify sending money as a cash advance. If that’s the case, you could face additional fees, an increased APR on the transaction and no grace period.
- Transferring money from your Venmo balance to your bank account is free for a “standard transfer,” which takes one to three days, according to the company’s website.
- Instant transfers (moving your Venmo balance to your bank account typically within a half hour), require an eligible debit card or bank account and carry a 1% fee (with a 25 cent minimum and a $10 maximum), according to the site.
How long does it take for Venmo payments to and from friends to arrive?
“Money is made available to the recipient almost immediately in most cases,” says Sinlao. “In some rare cases, there may be a problem processing a payment. If we identify an issue, funds may not be available to the recipient right away.”
If there’s an issue with the payment or if it’s been flagged for review, that’s “typically resolved within 48 hours,” according to the Venmo site.
Once the recipient receives the money, they can spend it from their Venmo account or transfer it to their bank account.
See related: Can you send money with a credit card?
Is there a limit to how much money someone can send and spend through Venmo?
- When you open a new Venmo account, the weekly limit on transactions is $299.99, according to the Venmo site.
- After your identity has been verified, you’ll have a weekly “rolling limit” of $6,999.99, according to the site.
- Other types of transactions may have different limits.
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.
One exception: “If you sent the payment to a new user – meaning you paid an email address or phone number that isn’t associated with an active Venmo account yet – you can go ahead and cancel the payment,” says Sinlao.
“There are several controls Venmo has in place to help users avoid sending money to the wrong person, one of which is an automatic flag to a sender when we have reason to believe they might be transacting with the wrong user,” says Erin Mackey, spokesperson for Venmo.
For instance, indications that “the sender and recipient, both of whom must hold Venmo accounts, don’t know each other,” she adds. “We look at information such as whether the sender and recipient have previously transacted on Venmo or share any friends on Venmo. In the event they have not previously transacted or share friends, Venmo will ask the sender to confirm the recipient’s identity by entering the last four digits of their phone number as an added security measure to avoid paying the wrong user.”
If you send the wrong amount or to the wrong person, Venmo recommends you ask the recipient to return it. If you don’t hear from the person who received the funds by mistake or need help sending a charge request, Venmo suggests contacting its support team.
But some consumer advocates believe that this type of error is already covered in the Electronic Fund Transfer Act, in contrast with provider practices, says Christina Tetreault, manager of financial policy at Consumer Reports.
“We think the P2P provider has an obligation under law to help you get your money back, and to the extent that there is uncertainty, we have asked the Consumer Financial Protection Bureau to clarify,” she said. “Bank or non-bank, it shouldn’t matter – every consumer should have the right to help when an error occurs.”
Find out if your bank offers recourse, too, says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League.
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 it will offer if you link their product to a Venmo account.
- Will it offer chargeback protection if you make an error in sending money using your credit card?
- Does it cover you if you sent the money, but the transaction was for goods that turned out to be bogus?
- Does it only protect you if the account was hacked and the money was stolen?
Before you send a payment through Venmo, talk to the recipient and verify the email address or phone number. Make sure the person you’re sending money to is not a fraudster masquerading as a friend or relative. And proofread your payment details several times for typos before you hit send.
“Even if you know the person, if you have not sent them money before, it’s safer to ask them to send you a request first,” says Lauren Saunders, associate director of the National Consumer Law Center. “That way you know the username is accurate.”
Is money in a Venmo account FDIC insured?
That depends on how you use the account. Venmo accounts themselves are not insured by the Federal Deposit Insurance Corp. Theoretically, if you have a few bucks in your Venmo balance from roommates repaying their share of the bills and Venmo goes out of business, you risk losing that money.
If you use direct deposit or check cashing with your Venmo account, it “will be eligible to be insured by the FDIC up to the standard maximum deposit insurance amount (currently $250,000),” according to Venmo’s site. Venmo explains that this “helps protect you against the risk of loss of your funds” if the deposit banks it uses to hold those funds (currently Well Fargo and The Bankcorp Bank) would fail.
FDIC insurance would not apply if Venmo itself goes bankrupt, according to its site. In that case, the Venmo site states, “We believe that … funds that we have on deposit in a custodial account for the benefit of our account holders … should be protected from claims by our creditors.” But it warns “it is possible that you will not have access to those funds while court or other legal proceedings to determine ownership of the funds are ongoing.”
Are Venmo payments protected against loss, fraud and theft?
Under new rules, Venmo payments fall under the Electronic Funds Transfer Act, says Saunders.
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.), “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?
If there isn’t enough in your Venmo balance, the entire payment would be charged to your linked payment device. If you don’t have one or there’s not enough money available there, your account “will be temporarily frozen until the funds are paid back,” according to the site.
If you don’t repay the money you could face collection, as well as the reversal of charges, and Venmo can also recover the money through other accounts you have with Venmo or its affiliates, like PayPal, according to the Venmo site.
Can I shop with Venmo?
Yes. You can use Venmo to pay online with a number of national merchants. Venmo also recently “launched Venmo business profiles, a tool that allows small businesses and sellers to create an additional Venmo profile linked to their existing account to accept payments for goods and services,” said Sinlao.
And in 2020, the company started offering “touch-free Venmo QR code payments at 8,200 CVS Pharmacy locations, allowing customers to pay using Venmo at checkout – without needing to touch a keypad or sign a receipt,” says Sinlao. “We also have 10 major retailers signed to roll out Venmo QR codes – including Nike, Tumi and Bed, Bath and Beyond.”
See related: Guide to card-linked offer programs
Can I get rewards or cash back if I link my Venmo account to a rewards credit card?
You might, and it pays to check. The platform also lets you add merchant loyalty cards.
If you have a rewards card or loyalty program you use frequently, call the card issuer or program owner and find out how it treats Venmo transactions.
While you could earn rewards for purchases, a credit card might not be the best way to send money to individuals. The fee for using a credit card to send money is 3%. So unless you’re getting more than 3% in rewards, you’ll be paying more than you’re earning.
Also, ask your card issuer if it treats Venmo payments to friends and family as cash advances. If so, what will that cost? With some card issuers, cash advances mean extra fees and higher APRs for the transaction.
Are Venmo transactions public?
Yes – unless you change the privacy settings.
- Venmo is a hybrid of a peer-to-peer payment system and a social media network, and the default setting is “public.” So unless you change those settings, your transactions (minus the dollar amount) are visible.
- You can change the privacy settings for each individual payment or purchase, or for your whole account at once. And you can make payments visible to everyone, just your friends, or just the sender and recipient.
- To update your privacy settings, log in to your Venmo account and go to “Settings” and then “Privacy.”
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,” and “allegedly misrepresented the extent to which consumers’ financial accounts were protected by ‘bank-grade security systems,’” according to an FTC release.
Does Venmo offer its own cards?
Starting in June 2018, Venmo began offering its own branded Mastercard debit card. Issued by The Bancorp Bank, the card includes a rewards program, allowing users to opt in to the deals they want and get cash back – often 3% to 5% – at select stores and retailers.
The card “lets customers spend their Venmo balance in-store and online anywhere Mastercard is accepted in the U.S.,” says Sinlao. They can also make free ATM withdrawals through the MoneyPass network.
Venmo also launched a Venmo Credit Card with cash back rewards in October 2020 through Synchrony Bank.
“Customers automatically earn cash back on the categories where they spend the most, earning up to 3% back on their top spend category, up to 2% back on the second highest and up to 1% on all other purchases,” says Sinlao.
The cash back categories are groceries, bills and utilities, health and beauty, gas, entertainment, dining and nightlife, transportation and travel. The card is currently available by invitation only, says Sinlao.
See related: 10 cash back credit card mistakes you need to avoid
What’s new with Venmo?
- It’s added direct deposit capabilities. Customers can now use “Direct Deposit on Venmo” to send paychecks, tax refunds and government stimulus payments to their Venmo balance, says Sinlao.
- In January 2021, Venmo introduced a check-cashing feature. “Cash a Check” allows select customers to take pictures of paper checks and deposit them to their Venmo accounts, according to the company’s site.
With the free option, the deposit can take up to 10 days to arrive. Or customers can pay a fee to get their money instantaneously. (Which could be within minutes or up to 1.5 hours, according to the website.) The fee is 1% for government and payroll checks with pre-printed signatures, and 5% for everything else – with a $5 minimum.
For “a limited time,” the company is waiving fees for government stimulus checks, according to its site.
- Venmo is also working on “a redesigned digital wallet” scheduled to debut later this year, according to Investor’s Business Daily.
Do I need extra security while using Venmo?
If you’re going to send and receive money from your phone, it’s time to treat that phone like the wallet it really is.
- PIN- or password-protect your device.
- Use anti-virus and malware detectors.
- Even if you know a recipient, “if you have not sent them money before, it’s safer to ask them to send you a request first,” says Saunders. “That way you know the username is accurate.”
Venmo also offers its own security features, among them:
- You can choose to require a PIN or fingerprint to access your Venmo account.
- If you lose 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.
Why is the CFPB investigating Venmo, and how does that affect users?
The company recently revealed that it’s being investigated by the Consumer Financial Protection Bureau. In an annual filing with the Securities and Exchange Commission, Venmo stated:
“On Jan. 21, 2021, we received a Civil Investigative Demand from the Consumer Financial Protection Bureau related to Venmo’s unauthorized funds transfers and collections processes, and related matters. The CID requests the production of documents and answers to written questions. We are cooperating with the CFPB in connection with this CID.”
While the CFPB declined to comment, a Venmo spokesperson released the following statement:
“Venmo remains deeply committed to its compliance obligations and the company works closely with regulators around the world to adhere to all applicable rules and regulations in the markets in which we operate. Venmo will continue to work productively with the CFPB to provide information, as requested, on our practices and processes.”
So what does the probe mean for consumers?
“What it says to me is that the CFPB has picked up significant complaints about Venmo and they’re using the civil investigative process to see what’s going on,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “If I was a consumer, I would be monitoring my transactions from Venmo more carefully.”
That would include making sure the amounts going in and out of the account are accurate, and that there are no unnecessary charges, he adds.
It’s also smart to limit the amount of money you leave sitting unused in your Venmo account, says Ruth Susswein, deputy director of national priorities for Consumer Action. Her advice: Leave in enough to do what you need to do, “but not extra.”
And if consumers have any problems, especially involving unauthorized fund transfers or debt collection, they should contact the CFPB (as well as Venmo), right away.
“Complain to the CFPB now because it’s on their radar now,” Susswein says.
For Ed Mierzwinski, senior director of the federal consumer program for U.S. PIRG (formerly the Public Interest Research Group), the CFPB probe changes nothing. He offers the same advice to anyone using any peer-to-peer payment system.
“Don’t use Venmo or similar services for any transactions involving strangers, including large businesses,” Mierzwinski says. “Use it only for transfers between friends and family and trusted small businesses (like your landlord or lawn service).
“Always double-check that your transfer is to your actual contact,” he adds. “Identity thieves often set up look-alike accounts by downloading photos off the Internet and creating nearly identical user names. It’s not your friend’s username if it has an extra underscore at the end. “[And] keep your privacy settings on the highest level,” Mierzwinski says, “so they don’t know who your friends and contacts are.”