What is Venmo and how does it work? (2024)

FAQs

What is the downside to Venmo? ›

Its ease of use and lack of service fees make the app a profitable alternative to usual bank transfers. However, Venmo is not without its drawbacks, including security concerns, fees for certain transactions, and privacy issues. As such, it's somewhat inefficient for instant money transfers.

Venmo is a smartphone app designed to transfer payments from one user to another through connected bank accounts. Venmo is owned by PayPal.

To send money on Venmo, you need to link the app to a U.S. bank account, debit card, prepaid debit card or credit card. If you receive money and want to transfer it from Venmo, you'll need to link a bank account.

It's free to send and receive money using what's in your Venmo account or bank account. *Venmo does not charge for sending money from a linked bank account, debit card, or your Venmo account. There is a 3% fee for sending money using a linked credit card.

Do not use Venmo to pay or receive payments from people you don't know, especially if the payment involves the purchase or sale of a good or service.

Linking bank accounts to Venmo is generally safe, but not without risks. You should implement extra security measures when linking bank accounts or credit cards to Venmo, such as setting up multi-factor authentication on both your Venmo app and your online bank accounts.

Open the Venmo app. Choose your sign-up method and create a secure password (between 8 and 20 characters long, and should contain at least one number or symbol like !()@#$% Verify your phone number and email address. Add and verify your bank account.

Venmo is a large and trusted organization and holds all data and customer funds securely. As long as you're careful to keep your own account details secure, you should have no problem using Venmo safely without a bank account.

Both offer free payments from linked bank accounts, and both charge about 3% for payments from a credit card. Where they differ slightly is that Venmo extends its no-fee option to payments made from debit cards, while PayPal only allows free payments directly from a bank account.

You'll need to initiate a bank transfer to send the funds to your bank account. You can send the money in your Venmo account to your bank using the Standard or Instant method. If you're on the Venmo app, go to the Me tab, then tap Add or Transfer under Wallet (some users may see a Manage button here instead).

How do I pay someone on Venmo? ›

Venmo uses Plaid to verify your bank account information and, periodically, your bank account balance to check if you have enough funds to cover certain transactions.

Non-verified accounts are limited to $2,499.99 in purchases and sending money and to $999,99 in bank transfers per week. If the monthly limit is not exceeded, then you need to know how to add cash to Venmo if you still need to use the payment system in the current month.

However, while Zelle may appear more secure, applications like Venmo and PayPal are just as secure. All of them use data encryption to protect users against unauthorized transactions and store users' data on servers in secure locations. Venmo also offers users the ability to set a PIN code for access to the mobile app.

Like other payment or banking apps that connect to users' bank accounts, using Venmo comes with the risk of security breaches, hacking, or data loss. Unfortunately, hackers and scammers have been able to circumvent these safeguards.

Venmo differs from PayPal because it requires a bank account connection to complete transactions. Additionally, Venmo does not offer a refund policy in the case of scams as PayPal does. Both of these things make Venmo safety slightly more difficult.

And from there, you can use that money to pay bills or spend it as you normally would. Of course, if you know you have a payment due in a few days that you'll be sending via Venmo, then it's okay to leave that sum in your account. But otherwise, do yourself a favor and aim to keep your Venmo balance at or around $0.