Gone are the days where you have to carry cash when you go out for the night, our generation loves to have everything digital and are big users of mobile payment systems or P2P (peer-to-peer). Venmo is by the far the “Orca” in the room, as it is the most popular P2P among the millennial generation, but is Venmo truly “free” and how secure is it?
The Birth Of Venmo
Venmo actually started back in 2009 as a text messaging payment system, it was not till about 2012 when Venmo launched their application and it took off! No longer did you have to carry cash on a night out and worry about splitting the bill through credit cards. It was easier for one person to pay it and just say Venmo me! Because of this Venmo was quickly picked up by BrainTree for 26.2 Million Dollars #moneyface, and most recently BrainTree, which does the transaction for some of our favorite apps like Uber, was bought by none other than PayPal. Yes, Venmo is part of the PayPal family and although Venmo is reporting $0 in revenue, yes 0! Its parent company PayPal reports roughly $9.24 Billion.
So does Venmo make money?
No, they do charge 3% fee for credit cards but that is how much the credit card company’s charge them for the transactions, but Venmo does not charge for debit card or transfer transaction. With no ads on Venmo, this leads us all to believe that Venmo is in fact “revenue-less”. No one really knows, what Venmo does with your money once it is in their system. Since you have to transfer your money into Venmo bank and then transfer out of Venmo bank, one can interpret that Venmo has control over your money that is inside their system, but no one really knows if they are doing anything with it. Venmo, also is collecting a good amount of data on transactions we have, which could prove valuable to retailers and restaurants. Venmo also officially reached more than 1 Billion dollars worth of transactions...WOW
Is It Safe?
Essentially Venmo is using the same security protocols that our bank apps use, so yes, but there are some things to watch out. Like someone canceling the payment over to you.
• Wait to transfer the money out of Venmo if you are taking from a stranger
• Do not keep your money in Venmo for extended period of time, always transfer out to your bank
• Use for smaller transaction, anything under $1000
• If you trust your friends, paying the bill on your card is great way to get credit card points (First Class to Europe anyone?)
• Make sure if its on your card that you pay off the bill in full on your following billing cycle. (Interest and Penalties are too high if you carry a balance)
Overall Venmo is a convenient way to split the cost of everything from your electricity, to drinks on a night out, but there are some things to look out for and to not get carried away with using the system. We here at Orca encourage smart money habits, and want you to learn how to manage cash-flow/invest and use the tools out there. After all there are only two ways to make money… You at work or your money at work. Which would you prefer?