Generally speaking, Venmo is secure and safe to use thanks to bank-grade encryption safeguarding your account information and financial transactions. The security of Venmo payments is strengthened by features that restrict payments to personal contacts, along with a 24/7 customer service helpline offering support in the case of suspected fraud.
Venmo also allows people to add an extra level of security to their accounts by enabling two-factor authentication (a type of multi-factor authentication) and a PIN (personal identification number).
However, like other accounts, Venmo wallets are still potentially vulnerable to hacking and password cracking.
What is Venmo?
Venmo is a mobile payment service that facilitates peer-to-peer money transfers and payments. Having started as a text-message payment system in 2009, Venmo evolved into a digital payment platform and launched a smartphone payment app in 2012.
Since 2013, it’s been owned by the fintech giant PayPal.
Venmo started as a free peer-to-peer (P2P) payment app available for iPhones and Android phones. That service is still free, as is using Venmo to pay participating merchants, who now number in the millions. You must be 18 or older to have a Venmo account.
Some other Venmo services carry a fee, however. Payments that go through a credit card account rather than a linked bank account or the user’s Venmo account incur a 3% fee. There are other miscellaneous fees for transferring money instantly from Venmo to a bank and for depositing checks.1 Venmo also issues a debit card and a credit card that is accepted at a growing list of local and national retailers. Those products also carry fees.
How does Venmo work?
As a peer-to-peer networking app designed for quick and easy financial transactions, payments between Venmo accounts transfer funds between digital wallets hosted on the platform. This is how Venmo works to enable instantaneous in-app money transfers — a big advantage over traditional bank-to-bank transfers, which can take hours or even days to process.
While mostly intended for transfers between friends, family, and other contacts, you can also use Venmo to make digital payments to authorized merchants. But there is a Venmo transaction fee for commercial payments. And if you make Venmo transfers using a credit card (rather than a debit card, or your existing Venmo account cash balance), a 3% surcharge is applied.
After downloading the Venmo app from the Apple Store or the Google Play store, users are given options to link their Venmo accounts to a credit card, debit card, or checking account. Once enrolled, a Venmo user can instantly begin exchanging funds with any other Venmo user.4
For peer-to-peer transactions, Venmo is a middleman between the accounts of two users conducting a transaction. For example, say Addison agrees to sell Kya a bracelet for $50. Kya sends Addison the funds via Venmo, which then raises the balance in Addison’s Venmo account by $50 while reducing Kya’s Venmo balance by the same amount. Neither pays a fee.
In this way, a Venmo balance is essentially a virtual ledger that represents funds changing hands, within the Venmo platform. Until Venmo transfers the money into the recipient’s bank account, it isn’t technically in that user’s possession.
Sending and requesting money
You can send or request money by tapping the pay or request button in the Venmo app and then entering the other party’s email address, phone number, or username. If you are the person receiving funds, you can either keep the cash in your balance or transfer it to your linked bank account. Using Instant Transfer rather than the traditional slower delivery adds a fee.
You can add money to your Venmo account from your bank as well as from a Venmo debit card. You can also make payments through the app without holding the necessary funds in your Venmo account. If a payment exceeds your current Venmo balance, the money will be taken from your linked bank account. If the transfer amount is equal to or less than your balance, it will use the funds stored on the platform.
There’s no fee for making a payment unless you use a linked credit card.
Venmo’s age restrictions
Venmo isn’t yet available for younger teenagers. The app’s user agreement specifically requires users to be at least age 18.
If Venmo eventually does offer accounts for minors, parents should be sure to protect their children’s privacy by setting all transactions to “private”. This way, their children’s recurring purchases, locations, and payments aren’t accessible to the public.
Venmo fees
Opening a Venmo account is free and there are no monthly fees. As noted, a simple Venmo transaction from a user’s bank account, Venmo debit card, or Venmo cash balance is free of charge. If a credit card is used to pay, Venmo charges the sender a 3% fee.
Other services, listed below, carry additional charges:
Instant transfer fees
You can Instant Transfer money from your Venmo account to any U.S. bank account or participating credit card account for a fee of 1.75%. “Instant” means 30 minutes or less in this case.
You can avoid this fee by choosing the standard option, which is free and takes three to five business days.
Debit card charges
The Venmo debit card, issued in partnership with Mastercard, is free to use except for some ATM fees, which you can avoid if you’re careful.
ATM withdrawals are free from the MoneyPass network but cost $2.50 each from a domestic out-of-network ATM. Further, a $3 over-the-counter withdrawal fee applies when a signature is required for a withdrawal at a bank or financial institution.
There are no annual or monthly fees, processing fees, or interchange fees, Merchants pay the transaction fees.
Credit card charges
Venmo introduced its own credit card in 2021, and it carries a variable but steep interest rate just like most other credit cards. The interest rate as of March 17, 2023, is 19.49%-28.49%, depending on the applicant’s credit rating.
Cash advances cost the greater of $10 or 5% of the amount. Balances on cash advances carry an APR of 20.99% plus the current prime rate.
The credit card comes with a cash-back feature of 3% on your “top spend” category, 2% on your second most-used category, and 1% on everything else.
How secure is Venmo?
On one hand, Venmo is safe because it has measures in place to protect your funds and privacy. It uses encryption to safeguard stored personal and financial information. It continuously upgrades its application programming interface (API) for secure facilitation of transactions. Even the fact that it lets users lock their apps with a personal identification number (PIN) or use multi-factor authentication shows that security is important to Venmo.
Generally, we can say that your funds with Venmo are safe.
That being said, there are associated risks, and while these risks may not originate from the payment app itself, the consequences may directly affect Venmo users. We’re talking about scams and fraud committed through the app by cybercriminals.
Venmo scams to watch out for
Scams are, perhaps, the most common pitfalls of using payment apps such as Venmo. Scammers don’t need advanced knowledge about programming or hacking. They just need to convince their victims to do what they want them to do, and often in the most creative ways.
Here are a few real-world examples of Venmo scams:
Fake listing scams
How it works: You find a product listing online, often through Craigslist, social media sites, or fake websites. The seller asks you to make your payment through Venmo before shipping the item off to you or to hold it for reservation. However, there is no real product, and the fake listing is just there to convince you to send money to the fake seller’s Venmo account.
It is not possible to cancel or reverse payments made to an existing Venmo account, so your money is as good as gone if you fall victim to a fake listing scam.
How to avoid it: Only use Venmo the way it was intended to be used — to transfer and receive money from people you know and trust. Don’t make payments without first seeing the item in person; to be on the safe side, don’t transact with sellers who insist on online payments only.
In-person scams
How it works: A person approaches you in public, asking if they could use your phone to make a quick phone call. Once in possession of your phone, they’ll open Venmo and transfer funds to their own account.
How to avoid it: When someone asks to borrow your phone to make a call or send a text, dial the number or type in the message yourself. Also, lock your Venmo app with a PIN or face ID to stop anyone besides you from accessing it.
Fake prize/cash reward
How it works: A scammer pretending to be from Venmo sends you a text or email telling you that you won a prize, or that you’ll be rewarded money if you take part in a survey. The included link will lead you to a phishing website, which will ask you to log into Venmo or give personal information. They’ll capture your login credentials to hack your Venmo account and steal your funds, or your personal information to commit identity theft.
How to avoid it: Never enter your Venmo login information outside the Venmo app or website. When using the internet, always connect to a VPN that can detect and block malicious or phishing websites, such as NordVPN with its Threat Protection feature.
Venmo Privacy
Federal laws require payment apps such as Venmo to verify the identity of its users3, and that includes collecting personal information, such as legal names, addresses, birthdates, and Social Security numbers (SSN). The process might even call for you to provide a digital photo of your U.S. passport, driver’s license, SSN or ITIN assignment letter, or a tribal ID card.
Now, it’s worth pointing out that you can opt not to verify your identity, but that would severely limit your access to Venmo’s features. You won’t be able to do things like:
- Send more than $300 in any seven-day period
- Transfer more than $1,000 to your own bank account in a week
- Manage a group account
- Receive payments for goods and services through Venmo
- Hold a balance of funds on your Venmo account
Does Venmo have buyer protection?
Although Venmo doesn’t offer comprehensive buyer protection, it does have a Purchase Protection Program for commercial transactions that meet certain criteria. Qualified payments include:
- Purchases made using a Venmo Debit Card
- Purchases from specific, authorized merchants
- Payments to business or personal profiles that are tagged as a “purchase” and sent using the Pay and Request feature in the Venmo app
If items you paid for through Venmo aren’t delivered at all, arrive damaged, or are simply incorrect — and you qualify for Venmo fraud protection under the above terms — you’ll be reimbursed for the purchase, plus shipping costs.
But while Venmo does offer fraud protection under those limited circumstances, money sent via the app is not protected in most situations. That means a lot of loopholes remain open to abuse, leaving users vulnerable to Venmo scams.
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