Venmo: What it is, How it Works & Pros and Cons

Venmo: What it is, How it Works & Pros and Cons

Over the last decade or so, the number and popularity of digital payment services have soared, with an array of apps and platforms available to make finance more seamless.

One of the most popular payment service apps in the U.S. is Venmo, a peer-to-peer (P2P) payment app founded in 2009.

What is Venmo?

Venmo is a peer-to-peer payment app enabling users to quickly send or receive money from their friends, family or acquaintances. 

Venmo achieves this with a social twist since users can send messages and emojis with their payments and like or comment on exchanges made between friends on a social media-like feed.

Since its founding, Venmo has expanded its horizons, becoming a payment option with retailers such as Hulu, Footlocker, and millions more participating merchants. Venmo users can use their Venmo accounts to do their shopping.

Both these services are free for users, though merchants pay 1.75% of the cost of each transaction.

How does it work?

To use Venmo, you must first download the app – available for iPhone and Android phones – and link the app to either your bank account, debit card or credit card (though you should note that credit card payments are subject to a fee worth 3% of the transaction).

Then, you can start sending or receiving money from any Venmo user by tapping either ‘pay’ or ‘request’ and entering the username, email or phone number of the person you want to send or request money.

When you receive funds from another Venmo user, the amount will detract from their account and add to yours. You can then keep the money in your Venmo account or transfer it to your bank account.

This transfer typically takes 1-5 days, though Venmo users can opt for ‘instant transfer’ to have the money transferred within 30 minutes. Still, you must pay a fee of 1.75% of the value transferred.

What are the pros of using Venmo?

1. Quick and easy to make payments.

Within minutes of downloading the app, you can start making payments to friends and acquaintances, needing only a single piece of contact info to send and request money instantly.

Venmo makes splitting bills easier, as you can request the same amount of money from multiple people at once. Venmo also provides a calculator to help divide costs fairly.

2. The social aspect.

Thanks to the customisation features – including the ability to add notes and emojis to the funds you transfer or request – Venmo can make asking people to pay you back a lighthearted, whimsical task.

The ‘request’ function also allows you to remind someone to pay you back what they owe without the awkwardness of having to message them directly and organise a bank transfer.

3. Basic service is free for users.

Venmo users don’t have to pay fees to send or receive money from other users or transfer money from their Venmo to their bank account.

This means Venmo users can benefit from the ease and convenience of the P2P service without losing out financially.

What are the cons of using Venmo?

1. Can’t make international payments.

To use Venmo, you must live in the U.S. and have a U.S. phone number. 

This means that even if you’re a U.S. native, you can’t send or request funds from any of your international friends or family members.

2. Transactions are public by default.

Venmo’s default settings make it so that all of your exchanges – including the messages sent along with funds (though not the amount sent) – are visible to any Venmo user who wants to view them.

If you want to keep your finances more private, you’ll need to go and alter your settings accordingly.

3. Potential scams and hackers.

The biggest downside to using Venmo is the potential for your money to be stolen.

If a hacker gains access to your Venmo, it’s pretty easy to change the associated bank account – so the hacker could change the account to their own and transfer the money in your Venmo to their bank.

What’s more, a common Venmo scam has users being sent money by a scammer who asks for the money back, claiming it was an accident. In actuality, the scammer has used a stolen credit card, and when the cardholder reports the fraud, Venmo will remove the sum from your account; if you’ve already sent the scammer the money back, this is bad news for you.


Venmo provides an easy way for people in the U.S. to exchange money, make bill splitting easier and pay friends and family back without extra costs.

However, when using the app, it’s essential to be highly mindful of security: avoid leaving any significant funds in your Venmo account, never share your password and always report any unusual activity to Venmo to protect your finances.


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