Apps | 06.25.2022

Should You Be Using Venmo? Is It Really Safe?

Is Venmo Safe to Use? Header Image featuring the app's home screen

By Franki Hanke

Popularized for easier payment between friends, this cash app can streamline splitting the bill (and more). 

There’s a lot of scams online. It’s no surprise that you’re wondering “Is Venmo safe to use?” or if you can trust an app asking you to link up your bank account. However, if you’re avoiding Venmo without all the information, you’re missing out. 

What is Venmo? 

Venmo is a payment app on iPhone and Android devices owned by the familiar Paypal. Designed for peer-to-peer payments, it’s a simplified way of sending money without needing cash, a check, or a wire transfer to do it. 

If you’ve ever used Paypal to create invoices or send/receive money, Venmo is a simplified payment option without added functionality. 

How does Venmo work? 

With a Venmo account, users can send funds to each other. Since Venmo has a standard 3% transaction fee for funds taken from a credit card, most users will connect to their bank account (or debit card) for free transfers. 

Then, when two users exchange money, Venmo acts as the middle man. Instead of interfacing with someone’s bank (like a wire transfer) users interact with Venmo who receive money from the Sender’s Bank and then transfers the money into the Recipient’s Bank. 

Additionally, Venmo offers the Venmo Mastercard which is a Venmo-funded debit card. However, when people refer to using Venmo, they mean the app. 

Why use Venmo? 

Venmo provides a simple, quick way to exchange money. As fewer people carry cash around, many people rely on Venmo for cashless money transfers between friends. 

For example: 

→ Splitting the cost of a shared activity concert tickets or lunch

→ Contributing to a shared pool (for a group trip or party) 

→ Sending someone a small surprise or as a tip 

If you often want to pay friends for split expenses, contribute to a group fund, or send friends or family a small (cash) treat from afar, you can do that with Venmo. 

While this is the main use of Venmo, it is a payment option for some retailers too. 

Is Venmo safe to use? 

Venmo, like any internet-connected app, can be hacked. To protect against this, they do use data encryption technology, however, it’s still possible and has happened. As evidence, Venmo has hit the news twice for concerns about their security measures: first with the Texas Attorney General in 2016 and second with the Federal Trade Commission (FTC) in 2018. 

Most Venmo users safely use Venmo with steps to limit the ease of hacking or scamming your account. 

1. Limit the funds in Venmo. 

Don’t store money in Venmo all the time (or store a small amount). The money sitting in your Venmo balance is the easiest to steal by hijacking your account and triggering unauthorized transactions. Transfer money into your bank account for more protection between Venmo charges. 

2. Bulk up your privacy settings. 

There are two veins for access to your Venmo account: directly from your phone or via your digital account. By increasing security in both ways, you increase the protection you have. 

On Your Phone

You must have a username and password for the Venmo app, but a pin code, face ID, or fingerprint scan is optional for extra security. Add these multi-factor authentication options for a more secure account. 

On Your Account

Venmo has a social aspect that’s unnecessary. Change your settings to increase privacy. Here’s how: 

→ Open the app. 

→ Click the three bar icon on the top right hand corner. 

→ Click Settings on the bottom end of the list. 

→ Click Privacy in the middle of the list. 

→ Set your Privacy to “Private.” 

By changing this setting, you tailor Venmo to be more like a payment service and less like a social media site. 

3. Only use with actual friends. 

Don’t rely on Venmo for payments with strangers. Since it’s classified as a payment app for friends, Paypal isn’t concerned seller protection. Scammers are your job to avoid. 

Imagine you sold a vintage treasure from Craigslist, instead of handing over cash, your buyer sends a Venmo payment instead. You confirm the payment, hand over your grandmother’s dresser, and drive home. 

But, the next day the other user disconnected their account or canceled the payment. Now, they have their money back and your dresser. This is one of the common Venmo scams that’s easily avoided by using the mobile app as intended, only with friends. So, is Venmo safe to use with strangers? No. It’s not set up to be safe for strangers.

How to setup and use Venmo? 

If you’d like to use Venmo, download it from your phone app store. Either the Apple App Store or Google Play Store will have Venmo available for a free download under Personal Finance.  

Once downloaded, make an account with an email and phone number. Then, you’ll need to fund the account to fully use it. 

Link Your Bank Account

Here’s how to link your financial institution.

→ Open the app. 

→ Click the three bar icon in the top right hand corner. 

→ Click Settings on the bottom end of the list. 

→ Click Payment Methods from the top end of the list. 

→ Click “Add a bank or card.” 

→ Select Bank. Some accounts will be eligible for Instant Verification. Otherwise, you’ll need to use Manual Verification. 

→ Enter your account information including Routing and Account numbers. Ensure they are correct. 

Once you’ve entered your information, Venmo verifies the account my sending two microtransfers to check the account. After entering, you’ll need to wait one to three business days for the transfers to arrive. Then, you return to your Venmo account to input the amount of each transfer so Venmo can confirm the account. 

If you have issues with the process, it’s best to consult Venmo directly. 

Is Venmo safe to use is only question one, next is whether you'd rather use Venmo or an alternative.
Send Money

Now that you’ve linked your savings or checking account, you can make your first mobile payment. 

→ Open the app.

→ Click the large blue button: “Pay or Request.” 

→ Select a friend or scan your friend’s QR code to choose your recipient. 

→ Verify the name is correct. 

→ Enter your desired amount. 

→ Choose “Pay” to send money to them. 

It’s that easy. The simple process to transfer funds is exactly why Venmo is popular. 

What about Zelle?  

For payments between friends, Venmo is no longer the only option. Zelle, another personal finance option, is facilitating the same thing now by partnering with banks. 

Now you know all about Venmo. If you’re looking for other apps to streamline your life, we’ve rounded up 15 favorites.

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