In today's connected world, it's never been easier to send or receive money. However, with heightened connectivity often comes heightened risk. Mobile payment apps like Venmo, PayPal, Zelle, and Cash App may streamline the experience of person-to-person payment, but they can also leave you vulnerable to certain schemes and scams if you're not vigilant. Venmo has made it especially easy to make payments in social settings—for instance, you might use it to repay a friend after they covered the cost of a dinner bill or concert ticket. But if you're one of the tens of millions of people using the app, you may be wondering: How safe is Venmo, really?
We've tapped financial experts to share everything you need to know about Venmo security so you can protect your funds and private data on the popular platform.
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What Is Venmo?
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Venmo is a popular app that allows you to link your bank account, credit card, or debit card to an online profile in order to streamline person-to-person payments.
"Venmo is the tastemaker in mobile payment services, providing real-time person-to-person sending and receiving of money," says Bhavin Swadas, a finance and savings expert at Roar The Deal. "It's built for convenience, powering transactions among friends and family for shared expenses like splitting bills or sharing rent."
He adds that the app merges social elements by allowing one to see transactions among friends, making the act of paying more interactive and engaging.
Is It Free?
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It is free to use Venmo for sending money when it is linked to a bank account or debit card. However, there are some instances in which you may incur fees.
Swadas notes that if you link your account to a credit card, you'll be charged a small percentage of transactions. "Also, instant transfer into a bank account attracts a charge; however, the standard transfers are free but take a few days," he adds.
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How Does Venmo Work?
How exactly does Venmo work? The process of sending and receiving cash is simple once you've set up the app.
"Venmo links one's bank account, debit card, or credit card. People can send or request money by simply typing in the recipient's username, phone number, and/or email, and the money instantly transfers," says Swadas. "It also has a social side where people can type messages or even use emojis to make it fun."
What's the Venmo Credit Card?
The Venmo Credit Card is a physical card that can be used anywhere Visa is accepted. It allows cashback rewards on qualified purchases, which are applied directly to the user's Venmo account.
"The card is linked directly to your Venmo account, and transactions show in the app, thus keeping one updated on their spending and financial management," Swadas tells Best Life.
What's the Venmo Debit Card?
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The Venmo Debit Card is a physical debit card linked directly to your Venmo balance. It can be used anywhere that accepts Mastercard, explains Michael Collins, CFA, founder and CEO at WinCap Financial.
"This offers the convenience of being able to draw money directly from Venmo; hence, there is no need to transfer [smaller sums of] money into one's bank account," says Swadas. "Other perks include no annual fees and the ability to withdraw cash from an ATM."
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Is Venmo Safe?
As of 2023, Venmo had a total of 85 million users and an iOS rating of 4.9 out of 5—meaning the vast majority of people who use the app are satisfied customers.
"Venmo is generally a very secure means of online transfer, providing protection for most of its users' private financial information through encryption and further stringent security measures," says Swadas. "However, it requires the user to be highly aware and switch on additional security features such as multi-factor authentication. Besides the security settings, transactions should only be between trusted contacts to avoid fraud or other types of scamming."
Scammers may choose their targets based on viewable transactions, so one way to limit your risk is to set your transactions to private. Because these are visible to the public by default, it's also a good idea to go into your privacy settings and select "Change All to Private." This will hide your past transactions as well as your future ones.
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Can I Use Venmo in Place of a Savings Account?
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Another important Venmo safety habit is to regularly transfer your balance to your bank account. Because it's not backed by insurance, Venmo is no replacement for a savings account.
"This app just holds your balance; it won't pay interest on it or give you some other valuable security features and many other benefits that traditional savings accounts offer to their users. For financial growth and security, it's best to use a dedicated savings account with FDIC insurance," says Swadas.
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Common Venmo Scams and How to Avoid Them
Though the Venmo app is generally considered secure, there are still several ways that you could fall victim to a scam on the app.
Flash Sales
Scott Lieberman, a financial expert and the founder of Touchdown Money, says flash sales are commonly used as a pretense for fraud.
"This has been a common scam for years: A seller puts out a hard-to-find item at a great price and asks for Venmo payments. You make the payment, and then you never see the item. What can you do? Turn on the payment tag before you send any payment for goods or services. If you've been tricked, Venmo can recover your money," he tells Best Life.
Scam Payments and Overpayments
Beware if someone deposits too much money into your account—this can also leave your digital wallet lighter.
"This scam sees an unexpected payment in your account, followed by a message claiming it was a mistake," explains Lieberman. "Most people are sympathetic and honest, and they send money back. But it's a scam; Venmo is already reversing the money sent to you while your money is gone. Rather than sending it, ask Venmo to check the transaction."
Phishing Emails
One important rule to remember about any financial tool you use—including cash payment apps—is to always protect your privacy. Phishing emails, which may even appear to come from the company itself, are just one way that scammers will try to gain access to sensitive information.
"Be safe by never giving out your login information, verifying who it is you are dealing with, and be wary of unsolicited messages or requests," advises Swadas.
Prize Winner Scams
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Another common scam happens under the guise that you've won a prize or contest.
"You get an email saying you've won something, and you just have to log into your Venmo. If you use the link in the email, you go to a different site that lets the scammer get your information," Lieberman says.
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Venmo vs. Other Credit Cards
The biggest reason you would choose to pay someone using Venmo versus a credit card is that most private parties don't have a way of receiving a credit card payment. However, it's important to note that when you link a credit card to your Venmo account rather than a bank account or debit card, you will be subject to an additional three percent fee on each transaction. This is on top of whatever fees your credit card company already charges.
Venmo Alternatives
Venmo offers convenience and security, but it's not the only cash payment app or the only way to transfer money.
“Some of the excellent alternatives to Venmo include PayPal, Cash App, and Zelle. PayPal offers buyer protection and is widely used, which makes it perfect for online purchases. Cash App offers almost the same functionality and investing in stocks. Zelle directly integrates with many banking apps and offers speedy, safe transfers without needing an application from a third party,” says Swadas.
Of course, many financial institutions also offer bank checks, money orders, electronic transfers, or wire transfers when you need to transfer money from your bank account to someone else's. This is preferable if you're transferring a large sum of money since Venmo's single transfer limit is $5,000 for verified accounts.
Conclusion
When you want to send and receive money hassle-free, Venmo offers a simple, streamlined, and secure way to do so. By putting certain safety measures into place, you can ensure that your private information and money are safe from fraudsters and schemers.
However, it's important to look out for the most common Venmo scams and to proceed with caution when Venmo transactions seem suspicious. Don't send money to any Venmo users you don't know or share details about your linked bank account, and always use strong passwords and multi-factor authentication, including a PIN lock. By treating your Venmo with as much care and caution as you do your bank account, you can send and receive money without unnecessary risk.
