This article contains content that is written like an advertisement. (May 2021)
|Developer(s)||Venmo, LLC (subsidiary of PayPal)|
|Operating system||Android, iOS|
Venmo is a mobile payment service owned by PayPal. Venmo account holders can transfer funds to others via a mobile phone app; both the sender and receiver have to live in the U.S. It handled $159 billion in transactions in the first quarter of 2018.  Venmo was launched in 2009 targeting friends splitting bills, e.g. for movies, dinner, rent, tickets, etc.
By default, Venmo publishes every peer-to-peer transaction (excluding the amount), a feature shown by researchers to reveal sensitive details about users' lives in some situations. In 2018, the company settled with the FTC about several privacy and security violations related to this and other features, and made changes to the corresponding settings, but it continued to attract criticism for exposing users to privacy risks.
Venmo was founded by Andrew Kortina and Iqram Magdon-Ismail, who met as freshman roommates at the University of Pennsylvania. According to Kortina, the duo were initially inspired to create a transaction solution while, in the process of helping start a friend's yogurt shop, they "realized how horrible traditional point of sales software was". At a local jazz show, Kortina and Magdon-Ismail conceived the idea of instantly buying an MP3 of the show via text message. Finally, the idea was cemented when Magdon-Ismail forgot his wallet during a trip to visit Kortina. The process of settling their debt was a considerable inconvenience, especially compared to the possibility of mobile phone-based transactions. Shortly after, they began working on a way to send money through mobile phones. Their original prototype sent money through text messages, but they eventually transitioned from text messages to a smartphone app.
Prior to October 2015, Venmo prohibited merchants from accepting Venmo payments.
On January 27, 2016, PayPal announced that Venmo was working with select merchants who would accept Venmo as payment. Initial launch partners included Munchery and Gametime. All merchants that accept PayPal can now accept Venmo. As of May 2018, Venmo's merchant product did not permit "selling goods or services in person"; however, research into mobile payment trends among mom-and-pop restaurants in New York City that month revealed a grey market use case whereby some Chinese takeouts and food trucks used personal Venmo QR codes to accept payments from customers. This QR payment behavior was similar to that used via Chinese mobile applications WeChat and Alipay within these same establishments.
In October 2020, PayPal announced that Venmo along with PayPal services will allow users to purchase and use cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, and Litecoin in select international markets starting in the first half of 2021.
On April 20, 2021, Venmo announced that it is beginning its roll out for the ability to buy, hold, and sell cryptocurrencies using the platform. However, only selected users have access to the feature and it is estimated that the cryptocurrency transfers will become available for the whole userbase only in May 2021.
Users can create an account via a mobile app or website and provide basic information and bank account information. One must have a valid email address and an American mobile phone number to use Venmo. Recipients of transactions can be found via phone number, Venmo username, or email.
Users have a Venmo balance that is used for their transactions. They can link their bank accounts, debit cards, or credit cards, to their Venmo account; alternatively users can order a Venmo MasterCard and pay through it. Paying with a bank account or debit card is free, but payments via credit card have a 3% fee for each transaction. Some credit card providers may charge cash advance fees for Venmo payments. If a user does not have enough funds in the account when making a transaction, it will automatically withdraw the necessary funds from the registered bank account or card.
Users get rewards into their accounts when Venmo is used with selected merchants. Through Venmo Rewards Program, they can use these by bank account transfer or debit card and merchants in-app.
When users first create an account, total transactions cannot exceed $299.99 until their identity is verified. After their identity has been verified, users can send up to $2,999.99 in each seven day period.
Since 2008, cash transfers using Venmo have not been instantaneous and could be canceled after an initial transfer is sent. Like traditional wire transfers, they can take one to three business days to become final.
In January 2018, PayPal rolled out an instant transfer feature on Venmo, allowing users to deposit funds to their debit cards typically within 30 minutes. A fee is deducted from the amount for each transfer; 1% or $10, whichever is less. The standard bank transfer (typically completed within 1–3 business days) is available for no fee.
In 2018, Venmo released a new physical debit card available for users. The card runs on the MasterCard network and offers ATM access and overdraft protection. It can be used anywhere that accepts MasterCard, and it enables up to $400 in daily ATM withdrawals, though transactions at non-MoneyPass ATMs come with at least $2.50 in withdrawal fees.
In addition, the service offers a reload function, which, when enabled, takes money from a user's linked checking account in $10 increments if their Venmo balance drops too low to cover a purchase. Customers could be subject to fees or other consequences from their bank if they overdraft that account. Card purchases show up in a user's Venmo transaction history, and the card can be canceled from within the app. These features make the card similar to a traditional bank debit card, but adds the ability to directly track spending in-app.
Social component and privacy
Venmo includes social networking interaction; it was created so friends could quickly split bills, whether that is for movies, dinner, rent, tickets, etc. When a user makes a transaction, the transaction details (stripped of the payment amount) are shared on the user's "news feed" and to the user's network of friends. This mimics that of a social media feed. There is a "world wide" Venmo feed, a "friends only" feed, and then personal feed. Venmo encourages social interaction on the application through comments using jokes or emojis and/or likes. In 2016, around 30% of approved Venmo transactions included at least one emoji.
Early on, Venmo required new users to sign up through Facebook, which made it easy to find peers they wanted to pay and also provided Venmo with free marketing. For users not friends on Facebook, the application allowed the opportunity to search by username and phone number. Profiles are personalized with profile pictures, usernames and Venmo transaction history. The transactions can be made private, but most users keep the default and do not change the privacy settings. Venmo does not have either buyer or seller protection.
Venmo includes three social feeds: a public feed, a friends feed, and a private feed. By default, all Venmo transactions are shared publicly. Anyone who opens the app to the public feed, including people who do not themselves use Venmo, can see these publicly shared posts. The privacy settings can be changed so that all posts are either shared only with a user's Venmo contacts, or even kept private. If posts are shared only with contacts, they still appear in a friends feed, whereas private transactions are only visible to the two parties involved in the transaction. If two users involved in a single transaction have differing privacy settings, Venmo applies the more restrictive level. Users can override their overall preference for any individual transaction, including after the transaction has been made.
Venmo has claimed that its security is bank-grade, and that personal and financial data are encrypted and protected on secure servers to guard against any unauthorized transactions. Venmo uses encryption to help protect the user's account details and store that information on servers in secure locations. On the web, "https:" and a lock next to the web address is the user's signal that encryption is on.   However, journalists, security researchers, the California Department of Business Oversight (DBO) and the Federal Trade Commission have all disputed these claims.
In February 2018, the FTC settled with Venmo, after an investigation uncovered false representations about "bank grade" security and failures to comply with the Gramm-Leach-Bliley Safeguards Rule and Privacy Rule. Under the settlement, Venmo will be required to undergo third-party audits every two years for the next ten years. The FTC also complained that Venmo "misled consumers about the extent to which they could control the privacy of their transactions" and misrepresented the availability of funds for withdrawal.
Venmo states that customers need not worry about their security or privacy, and encourages users to set up a PIN to increase security. On July 17, 2018, The Guardian published an article showing that Venmo is insecure because privacy protection is not set by default. According to the researcher who found this privacy issue, Venmo publishes all transactions along with names openly into the World Wide Web.
In November 2018, The Wall Street Journal reported that Venmo, in the first quarter of 2018, had suffered $40 million in operating losses—nearly 40% more than it had budgeted for—due to "a wave of payments fraud".
Criticism and controversies
A 2018 study analyzed over 200 million public transactions and found that Venmo "reveals a massive amount of private details about users' lives by default". The same year, the company reached a settlement with the FTC after the FTC had accused Venmo of "misleading" users about the privacy settings changes required to make transactions completely private. In 2019, another researcher downloaded and analyzed seven million transactions, concluding that although Venmo had made some minor improvements limiting mass-scraping, the data still put users at risk for various forms of cyberattacks.
In 2019, Mozilla and the Electronic Frontier Foundation wrote an open letter "to express our deep concern about Venmo's disregard for the importance of user privacy, and to call on Venmo to make two critical changes to its privacy settings: make transactions private by default, and give users privacy settings for their friend lists".
Venmo's social model has attracted attention from researchers. A research group from University of Washington observes[when?] that the social feed in Venmo differs from other social networks in that activity is driven by financial transactions. A user could make a trivial transaction to make a post (e.g., sending someone $0.01, or requesting $0.02), but only one participant in their studies reported ever doing this. Further, neither reading the feed nor sharing a transaction memo publicly or with friends is necessary to send or receive money.
On Venmo, people transact with both friends and businesses via the app. Analysis of public transactions identifies a spectrum of use patterns, from regular users who create transactions for a variety of expenses, to niche users who use Venmo with a small cluster of friends to pay for just a few things (e.g., bills among roommates).
A 2021 investigation by BuzzFeed News reportedly managed to find the Venmo account of United States president Joe Biden after 'less than 10 minutes of looking for it'; BuzzFeed News additionally states that the Venmo app 'leaves everyone ... in the world exposed' and states that it reveals a major privacy concern.
Consumer Financial Protection Bureau probe
Venmo came under scrutiny from the Consumer Financial Protection Bureau in 2021 over the company's treatment of their customers owing money for transactions. Paypal, the company operating Venmo's platform, announced through their regulatory filing on the fifth of February that it had received a Civil Investigative Demand from the CFPB “related to Venmo’s unauthorized funds transfers and collections processes, and related matters.” Venmo has a history of using aggressive tactics to threaten debt-owing users, ranging from seizing the funds from the user's other Paypal accounts to sending debt collectors after users. Customer service emails showed the company notifying users it could involve a collection agency over debts from $3,000 to as low as $7, according to an article in 2019 by the Wall Street Journal, in some instances even when the customer in question had been scammed. Such practices continued during the COVID-19 pandemic.
- Cole, Samantha (August 28, 2019). "Venmo Is Still Exposing Your Connections to Everyone You Know". Vice. Retrieved February 12, 2020.
- Paul, Kari. "The scary reasons you should make your Venmo account private". MarketWatch. Retrieved February 12, 2020.
- Elgar, Tyler (October 2, 2017). "Venmo. The wallet of the future". Medium.
- Gillette, Felix (November 20, 2014). "Cash Is for Losers!". Bloomberg Businessweek.
- Schonfeld, Erick (September 16, 2010). "Social Payment Startup Venmo Raised $1.2 Million And Has A New iPhone App". TechCrunch.
- "Venmo-Funding Rounds". TechCrunch.
- "Braintree Acquires Mobile Payments Platform Venmo" (Press release). Business Wire. August 17, 2012.
- Wortham, Jenna (August 16, 2012). "Braintree, a Payments Company, Buys Venmo for $26.2 Million". The New York Times.
- Lardinois, Frederic (August 16, 2012). "Online Payments Service Braintree Acquires Venmo for $26.2M". TechCrunch.
- "eBay Inc. Completes Acquisition of Global Payments Innovator Braintree" (Press release). Business Wire. December 19, 2013.
- Rao, Leena; Perez, Sarah (September 26, 2013). "Ebay's Paypal Acquires Payment Gateway Braintree For $800M In Cash". TechCrunch.
- Rao, Leena (January 27, 2016). "You Can Now Use PayPal's Venmo to Pay Merchants". Fortune.
- Toplin, Jaime (May 1, 2017). "Venmo makes moves to monetize". Business Insider.
- "Payment Methods: Venmo". Braintree Support Articles. Archived from the original on May 14, 2018. Retrieved May 14, 2018.
- Chester, Ken (May 10, 2018). "Can China's 'WeChat Diaspora' Pioneer Mobile Payment in the US?". Sixth Tone. Retrieved May 14, 2018.
- "PayPal to allow cryptocurrency buying, selling and shopping on its network". Reuters. October 21, 2020. Retrieved November 2, 2020.
- "PayPal and Venmo will offer and accept cryptocurrency for all online payments". The Verge. October 21, 2020. Retrieved November 2, 2020.
- "Venmo adds support for buying, holding and selling cryptocurrencies". TechCrunch. April 20, 2021. Retrieved April 20, 2021.
- "Venmo is adding support for users to buy, store, and sell cryptocurrency". The Verge. April 20, 2021. Retrieved April 20, 2021.
- "PayPal's Venmo now offering physical credit cards aimed at millennials". ameinfo.com. July 2, 2018. Retrieved July 3, 2018.
- "Pricing". Venmo.
- "Fees & Venmo". Venmo.
- Fuscaldo, Donna. "PayPal All In With Venmo In 2020". Forbes. Retrieved February 25, 2020.
- Allan, Patrick (January 11, 2016). "Money Transfer Showdown: Square Cash vs. Venmo vs. PayPal".
- "Payment Limits". Venmo.
- "Venmo can now instantly transfer money to your debit card for 25 cents". www.theverge.com. TheVerge. January 26, 2018. Retrieved September 8, 2018.
- "Instant Transfers FAQ". help.venmo.com. Venmo. November 19, 2018. Retrieved November 19, 2018.
- Welch, Chris (June 25, 2018). "Venmo is officially launching its physical debit card". The Verge. Retrieved December 13, 2018.
- "Everything you need to know about the new Venmo card". The Daily Dot. June 25, 2018. Retrieved December 13, 2018.
- "Venmo-Braintree". Braintree.
- Moorthy, Neelesh (March 25, 2015). "Cash, credit or mobile app: the rise of Venmo". The Chronicle. Archived from the original on August 15, 2015. Retrieved April 18, 2015.
- Jain, Ashish. "Venmo Captions". Mybestcaptions. Retrieved January 17, 2020.
- "Venmo Unveils Most Emoji-Loving Cities in Honor of #WorldEmojiDay". The Venmo Blog. July 16, 2016. Retrieved May 11, 2021.
- Bird, John (November 4, 2015). "How Venmo Won In One Of The Most Crowded Spaces In Tech". Retrieved June 23, 2017.
- Wener-Fligner, Zach (March 20, 2015). "The emoji of Venmo: food, booze, partying, and, occasionally, rent". Quartz. Retrieved April 18, 2015.
- "Security". Venmo.com.
- "Venmo: App to make and share payments". Fiscal Today. Retrieved June 24, 2015.
- "Venmo security: it's not as strong as the company wants you to think". Slate. February 1, 2015. Retrieved October 23, 2015.
- "Security research of a social payment app" (PDF). MIT CSAIL. May 14, 2014. Retrieved October 23, 2015.
- "Venmo App: Users Raise Questions About the Security of Peer-to-Peer Money Transfer Service". ABC News. March 18, 2015.
- Demos, Telis "You Accidentally Sent $149 to a Stranger on Venmo? Good Luck Getting It Back," July 12, 2018 Wall Street Journal retrieved February 11, 2020
- Episode 922: "The Cost Of Getting Your Money Back," June 26, 2019, Planet Money on National Public Radio retrieved February 11, 2020
- "PayPal Settles FTC Charges that Venmo Failed to Disclose Information to Consumers About the Ability to Transfer Funds and Privacy Settings; Violated Gramm-Leach-Bliley Act" (Press release). Federal Trade Commission. February 27, 2018.
- Fair, Lesley (February 27, 2018). "FTC Venmo Settlement addresses availability of funds, privacy practices and GLB". Federal Trade Commission Business Blog. Retrieved April 7, 2018.
- "Before the Federal Trade Commission: In the Matter of Paypal, Inc., a corporation (FTC Complaint against Venmo)" (PDF). Federal Trade Commission. 2017.
- Nath, Trevir (March 24, 2015). "How Safe is Venmo and Why is it Free?". Investopedia. Retrieved February 23, 2018.
- "Venmo: how the payment app exposes our private lives". The Guardian. London. Retrieved July 19, 2018.
- "Scammers Use Venmo to Fool Sellers". Retrieved October 24, 2016.
- Rudegeair, Peter (November 24, 2018). "Venmo Caught Off Guard by Fraudsters; A spike in fraudulent activity earlier this year led to higher losses than the payments company had expected". The Wall Street Journal. Retrieved May 5, 2020.
- Salmon, Dan (June 26, 2019). "I Scraped Millions of Venmo Payments. Your Data Is at Risk". Wired. ISSN 1059-1028. Retrieved February 12, 2020.
- Xinyi, Zhang (2017). "Cold Hard E-Cash: Friends and Vendors in the Venmo Digital Payments System" (PDF). Proceedings of the International AAAI Conference on Web and Social Media (ICWSM 2017).
- Mac, Ryan; Notopoulos, Katie; Brooks, Ryan; McDonald, Logan (May 14, 2021). "We Found Joe Biden's Secret Venmo. Here's Why That's A Privacy Nightmare For Everyone". BuzzFeed News. Retrieved May 15, 2021.
- Peters, Jay (May 14, 2021). "Venmo shows who you're friends with even if you're Joe Biden". The Verge. Retrieved May 15, 2021.
- Relchert, Corinne (May 14, 2021). "Biden's Venmo account was reportedly tracked down within minutes". CNET. Retrieved May 15, 2021.
- Pengelly, Martin (May 15, 2021). "Joe Biden's Venmo account discovered in 'less than 10 minutes' – report". The Guardian. Retrieved May 15, 2021.
- McCaffrey, Peter Rudegeair and Orla (February 5, 2021). "Venmo's Debt-Collection Practices Probed by CFPB". Wall Street Journal. ISSN 0099-9660. Retrieved February 6, 2021.
- Rudegeair, Peter (March 25, 2019). "Venmo to Users: If You Owe Us Money, We're Coming for It". Wall Street Journal. ISSN 0099-9660. Retrieved February 6, 2021.
- Rudegeair, Peter (September 24, 2020). "Even in a Pandemic, Venmo Tells Conned Customers to Pay Up". Wall Street Journal. ISSN 0099-9660. Retrieved February 6, 2021.