Venmo Review: How It Works and How It Rates Among Competition

GOBankingRates Score

4.7
Our Take: Venmo joined the peer-to-peer -- or P2P -- payment platform industry 12 years ago. In this time, the company has focused on providing an easy-to-use, secure, affordable system for its users. It has the potential to rival any competition and continue to grow in popularity.
  • Fees
    4.7
  • Ease of Use
    4.8
  • Security and Privacy
    4.7
  • Fraud Protection
    4.7
How did we calculate this?

Venmo reviews from their users praise the ease and speed of the platform. More advantages and disadvantages are listed below:

Pros

  • Easy to use
  • Customizable social feed
  • Quick transfers

Cons

  • Only available for people, banks, and cards located in the U.S.
  • Does not let users know upfront that their activity is visible in the feed

About Venmo

Venmo joined the P2P app industry in 2009. It was created by college roommates wanting an easy way to send money to each other. Four years later, PayPal acquired the payment platform. With its simple foundation and PayPal’s innovative nature, it quickly became popular among users and widely accepted among merchants.

How Venmo Works

Getting started with Venmo is easy. You can sign up straight through the website, or you can download the app. All you need is to be in the United States and have a U.S. cell phone to use the app.

After providing your basic information, you can link your preferred bank account, credit card, or debit card to use for transactions. There is no need to fund your Venmo account as you can complete payments directly from your funding source. Any bank accounts, debit cards, or credit cards you link must also be located and issued 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 have cash in your Venmo balance, that can be used, as well. To send money through Venmo, follow these steps:

Step-By-Step Guide

  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 a news feed that displays the transactions you and your friends make while hiding the transaction amount. If you would rather keep your spending and receiving to yourself, you can change the settings so it is no longer on display.

How To Receive Money Through Venmo

When someone sends you money, it appears in your account balance. Venmo should notify you by 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 shop, it is not necessary to transfer the money. If you choose to move it, there are two ways to do it:

Standard Transfers

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

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 30 minutes or less. The fee for an instant transfer is 1% of the transfer amount or a minimum of $0.25. The fee does not exceed $10.

Sending Limits

When you first create your Venmo account, you will go through a vetting 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 vetted, 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

Using Venmo is a budget-friendly option as there are few fees. The fees that do exist are optional fees and can be avoided by changing payment and transfer methods.

For instance, Venmo charges a 1% fee for choosing an instant transfer to your bank. You can avoid this fee by choosing a standard transfer. While it will take a little longer, it helps save some money.

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

Description Fee
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 card 3% 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 account 1% of transaction amount; $0.25 minimum up to $10, money is available in minutes.

Venmo Debit Card

Venmo has designed a Mastercard for its users. You can use your Venmo balance to shop anywhere 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

Usage Fee
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 yes. Venmo is a very safe P2P platform to use. It has encryption on par with banks and other financial institutions, and it was created to send money to people you know. When used as intended, it has little risk.

Additionally, the platform lets you add two-factor authentication. You can use a pin and fingerprint login to minimize the chance of someone else accessing your account. 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 important to note, though, that you are the best protection for your finances. Even the most secure platforms pose some risk. 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.

Venmo vs. Competitors

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

Type Venmo Zelle PayPal
Standard transfer speed -1 to 3 days
-1 to 3 days for non-enrollees
Minutes for current users 1 to 4 days
Instant transfer fees 1% of transaction fee; no less than $0.25, no more than $10 Free for current users 1% of transaction fee; no less than $0.25, no more than $10
Credit card transfer fees 3% of the transaction when sending money; $0 for authorized merchants None 2.9% of transaction + $0.30
Other fees $0 $0 2.9% fee for sellers + $0.30 per sale
Fraud protection Yes, for unauthorized purchases reported within 60 days. Yes, there is protection for unauthorized activity. Yes, if the payment is made for goods or services.

Venmo vs. Zelle

Zelle is a P2P feature connected to more than 100 banks and other financial institutions. Users can send money to others whose bank is part of the 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 typically have to wait longer for the transfer.

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

Venmo vs. PayPal

PayPal owns Venmo, so there are some 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.

Venmo FAQ

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.
  • Can I use Venmo for direct deposit?
    • Yes, you can set up direct deposit easily. After your identity has been verified, go to the menu on your dashboard. Click "Settings" and then "Show Account Number." The screen will display your routing number and account number. Copy the information and use it to fill out your direct deposit form.

About the Author

Brandy Woodfolk is an entrepreneur, teacher, and freelance writer. She received my Bachelor of Business Administration from Everest College, Digital Marketing Certification from Shaw Academy, Certificate in Personal and Family Financial Planning from the University of Florida Through Coursera, and she is completing her Master’s of Project Management from Northcentral University. She has dedicated her freelance writing career to creating content related to digital marketing and SEO, business, personal finance, family, and health and wellness.

Venmo Review: How It Works and How It Rates Among Competition
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