There’s never been a more convenient time to send someone money – or to receive it. But as with everything else in the age of connectivity, heightened convenience can come with heightened risk. While apps such as Venmo, PayPal, Zelle and Cash App can make person-to-person payments seem straightforward and delightfully instantaneous, they also put you at risk to common payment scams and schemes, should you be careless enough to interact with them.
Venmo’s ubiquity and easy interface make it especially easy to use in social settings – perhaps to reimburse a friend for covering the cost of dinner or concert tickets. But as one of tens of millions of Venmo users, you might wonder: is Venmo really that safe?
Our finance experts offer answers to all your Venmo security questions so you can safeguard the health of your cash and private information.
What Is Venmo?
Venmo is an app that you can use to connect your bank account, credit card or debit card to an online profile so that you can maximise person-to-person payments.
Venmo is the one that leads the mobile payment trend as a mean of person-to-person sending and receiving money through a real-time experience which was created for this particular industry,” says Bhavin Swadas, founder of Roar The Deal, a platform for financial and savings tips. “It’s made for ease as it powers transactions among friends and family members for mutual expenses such shared bills, rent among others.
He notes that the app also adds sociability, in that every transaction among friends becomes visible, and therefore more interactive and fun.
Is It Free?
You can use Venmo free of charge payment when linked to a bank account or debit card but there are some circumstances under which you may have a fee charged.
Swadas says that if you bind your account to your credit card, then every transaction will carry a small fee. ‘Also, the instant credit to the bank account has a fee; the normal payment is free but you need wait a number of days for that.
How Does Venmo Work?
How does Venmo work? I’ll explain how it forwards cash to you and back. 1.Paying: Once you’ve got the app up and running.
Venmo, as she explains it, links your bank account, debit or credit card. You can send money to someone, or to ask someone to send you money, just by typing the person’s username, phone number or email, and the money goes to the recipient’s Venmo account instantly. ‘It also has a social side to it,’ adds Swadas, ‘where people can type comments or emojis or whatever they want to make it fun.
What’s the Venmo Credit Card?
The Venmo Credit Card is a plastic card you can use just about everywhere Visa is accepted. You get cashback in the form of rewards (as with a lot of credit cards), which Venmo pays directly to your Venmo account after qualified purchases.
‘The card is connected directly to your Venmo account, and each transaction you make shows up in the app so you’re up to date on your spending and budgeting,’ Swadas tells Best Life.
What’s the Venmo Debit Card?
With the Venmo Debit Card, released last year and based on your Venmo balance, you have a physical debit card that works anywhere that accepts Mastercard (according to Michael Collins, CFA, founder and CEO at WinCap Financial).
This provides the benefit that money can be withdrawn directly from Venmo, so there is no need to move it into my bank account, I don’t have to pay annual fees, and every time I take out cash at an ATM it’s free.
Is Venmo Safe?
In 2023, Venmo reported that it had 85 million users and a 4.9 out of 5 star rating (on iOS). Clearly, the majority of people who use the app are satisfied.
‘In a nutshell, Venmo is largely a secure way to transfer money online,’ says Swadas. ‘It encrypts most if not all of its users’ financial information plus other data and has other additional security features only if users enable extra security features like multi-factor authentication. To deter things such as fraud and other types of scams, besides the security features, etc, only transact with your known contacts.’
Scammers could be selecting their victims at least in part according to watchable transactions: a simple way to reduce your exposure is to go into your transactions-page settings and select ‘All Transactions to Private’. These are all public by default, so you should go into the privacy settings and select ‘Change All to Private’ anyway, to hide your history (and besides, you might want the privacy on transactions in your future).
Can I Use Venmo in Place of a Savings Account?
Just as essential as checking your registered emails is the second key Venmo safety habit: regularly transferring your balance to your linked bank account. Venmo won’t insure your funds, after all. It’s no substitute for a savings account.
‘This app keeps your balance – it does not pay interest on it, it doesn’t offer you some other kind of security properties, and many other things that a traditional savings account gives to its users,’ says Swadas. ‘For building your wealth, and for your protection, use a dedicated savings account with FDIC insurance.
Common Venmo Scams and How to Avoid Them
Although it’s safe, there’s still many ways you can still be the victim of a Venmo scam.
Flash Sales
Such advance-fee loans are ‘almost always set up using flash sales as a pretext for fraud,’ says Scott Lieberman, who describes himself as a Wall Street expert and the founder of Touchdown Money.
This is all classic scamming: you list some hard-to-find item at a fantastic price, then Venmo requests. You pay, but the item never materialises. What to do? Enable the payment tag prior to making any good-and-service payment If you’ve been Bamboozled, Venmo will get your money back, he reassures Best Life.
Scam Payments and Overpayments
Take care not to put too much money into your account; this, too, can make your digital wallet lighter.
‘This happens when after you get an unexpected amount of money in your account, you get a message saying that it was an error,’ Lieberman says. ‘Most people are nice and want to return the money but, it’s a scam; Venmo is likely to reverse the money you sent them before yours has gone. Not send it. Ask them to verify the transaction with Venmo.
Phishing Emails
That’s a great general rule for any tool involving money you might use, cash payment apps included. Do be cautious about maintaining your privacy – one of many ways that scammers will try to pry your data from you is via a phishing email, perhaps one that seems official from the company itself.
‘Never give out your password, double-check just who it is you’re dealing with, and be suspicious of messages or requests that are unsolicited,’ advises Swadas.
Prize Winner Scams
Another common scam happens under the guise that you’ve won a prize or contest.
‘You get an email saying: “You’ve won something!”’ says Lieberman. ‘You have to log into your Venmo – if you click on the link that’s in an email, you’re not on Venmo anymore. You’re on a site that the scammer has where he can ID you and get all your information.
Venmo vs. Other Credit Cards
I think the biggest reason you’d choose to pay someone with Venmo over a credit card is that most individual people don’t have a way to receive a credit card payment – but of course, if you select to link a credit card rather than a bank account or debit card, you will pay an extra three per cent fee on each payment transaction (in addition to whatever your credit card company may charge).
Venmo Alternatives
Now sure, Venmo is convenient and secure, but it isn’t the only cash payment app available. And it isn’t even the only bank-to-bank payment app.
Venmo might not be your best option: other payment apps to check out include PayPal, Cash App, and Zelle. ‘PayPal includes buyer protection and is ubiquitous, so it’s great for online purchases,’ Swadas says. Cash App has many of the same features as Venmo and, just like its main competitor, you can also buy and sell stocks in the app itself. If your bank’s app has a built-in payment feature, Swadas recommends Zelle. It’s fast and safe, and it takes place in the banking app without requiring a separate download from a third party.
Yes, your bank probably does allow you to write the person a cheque, or buy her a money order, or at the very least, make an electronic transfer or wire transfer. You should absolutely use one of those options if your payment is above the $5,000 single-transfer limit for Venmo accounts that have been verified.
Conclusion
Venmo provides a smart and easy method for you to send and receive money without any trouble. additionally, Through some security system, your online information and money will be fairly protected from tricksters and scammers.
But remember to guard against the most common Venmo scams, and to treat any Venmo transaction with the same kind of caution that you’d apply to a potentially shady money transfer. Don’t send money to someone who claims to be a ‘Venmo stranger’, use your Venmo drunkenly in the wee hours, or share details about your linked banks accounts or verify card numbers. Always use multi-factor authentication where possible, including a PIN lock. Use the same degree of care for your Venmo as you do for your bank accounts, and you can get on with sending and receiving money to the people you trust without undue risk.
While we strive to offer the latest financial insights and news from top experts and journalists, we don’t provide financial advice. Instead, the information we publish should be considered general knowledge. Consult a financial professional before making any financial decision. Neither ATB Financial or Nelnet Partner Solutions are responsible for actions taken as a result of the information provided.
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