Is Venmo Safe to Use?

You’ve probably used Venmo a lot this past year, but is Venmo safe? And if so, what are the advantages of Venmo over other online payment providers? Read answers to these questions and more in our helpful guide below.

In This Piece

• What Is Venmo?
• How Does Venmo Work?
• Is Venmo Safe? What Are the Risks of Using Venmo?
• Is Venmo Free?
• What Is Venmo Debit Card and How Does It Work?
• Venmo and Taxes
• Venmo Scams to Watch Out for
• Why Does Venmo Require Identify Verification?
• Staying Safe with Venmo
• Venmo Alternatives
• Venmo Versus Credit Cards
• So is Venmo Safe?

What Is Venmo?

Venmo is a type of peer-to-peer—or person-to-person—payment app. Its parent company is money-moving giant PayPal, which had over 377 million registered users in the last quarter of 2020. Think of Venmo like “PayPal lite”—you can receive cash and send money to people, but you can’t send invoices or do anything complex. 

PayPal launched Venmo for one reason—to compete in the P2P payment marketplace. Not everyone needs PayPal’s full suite of services, but they appreciate a convenient way to split the bill. You can pay for part of a dinner or your share of the shopping with Venmo, and some online retailers also accept Venmo as a form of payment.

Venmo began offering a cash back rewards debit card—the Venmo Debit Card—in 2018. In late 2020, it launched the Venmo Credit Card. Like the Venmo Debit Card, the Venmo Credit card offers cash back—up to 3% on your “top spend” category.

How Does Venmo Work?

Venmo works a little like PayPal. To use the services you simply:

• Download and install the app on your phone
• Link the app to your bank account, debit card, or credit card
• Begin sending payments to friends, family members, and select online retailers

Venmo has an initial $299.99 weekly sending and receiving limit. To lift that limit, you need to provide identification documents. Once your ID is confirmed, you’ll have a $4,999.99 weekly limit.

If you want a Venmo Debit Card, you’ll need to apply online. To get a Venmo Credit Card, you need to be over 18 and a U.S. resident—and you also need to have had your Venmo account for at least 30 days. 

Is Venmo Safe? What Are the Risks of Using Venmo?

Venmo is generally very safe—the company uses bank-level encryption to keep your data safe. You can add a PIN number and enable multi-factor authentication (MFA) to make your account even more secure. A strong password combined with a PIN and MFA greatly reduces the chance of hacking.

Venmo’s default profile and payment settings are public. Thankfully, you can change your privacy settings to keep your payment settings under wraps. Venmo’s three privacy levels are:

• Anyone can find you and see your transactions.
• Only you and the person you send payment to will see a transaction.
• Friends only. Your Venmo friends can see you and can also see your transactions.

You can set your privacy settings to default to any of these three levels, or you can set levels on a transaction-by-transaction basis. You can also hide your past transactions.

Is Venmo Free?

Depending on how you use Venmo, it can be 100% free. Believe it or not, if you’re strictly using Venmo to transfer payments from one party to another and you’re not using a credit card, you may be able to use it for free.

However, there are some instances where Venmo does charge a fee. For example, if you’re using Venmo as part of your business, you’ll likely need to pay merchant fees. Here’s a look at the various fees Venmo charges account holders.

Instant Transfer Fees

You can transfer money from your Venmo account to your bank account at any time. This process can take 1-2 days to complete. If you need the money faster, you can opt for the instant transfer option, but it will cost you. Venmo charges an instant transfer fee of 1.75%, with a minimum fee of $0.25 and a maximum fee of $25.

Processing Fees

If you choose to make a Venmo payment using your bank account or debit card, you’ll incur no additional fee. If, on the other hand, you use a credit card to make this payment, you must pay processing fees. Venmo’s processing fees are 3%.

Check Deposit Fees

Venmo allows account holders to deposit checks directly into their Venmo account. However, it charges a fee for this service. The check deposit fee is 1% or a $5 minimum when depositing government-issued or payroll checks and 5% or a $5 minimum when depositing all other checks.

Merchant Fees

If you’re using Venmo to accept payments for a business you operate, you must pay merchant fees. Venmo charges business owners a 1.9% merchant fee plus an additional $0.10 per transaction.

What Is Venmo Debit Card and How Does It Work?

If you use your Venmo account quite often or have your payroll or government check deposited into your Venmo account, you might want to consider applying for a debit card with Venmo. This card is similar to any other debit card from a financial institution. It lets you spend the money in your Venmo account anywhere that accepts debit cards.

You can track your deposits and payments directly on the Venmo app, and you can also check the balance in your account. Since this is a debit card, it doesn’t have the same strict credit requirements you might run into when attempting to obtain a credit card. Obtaining this type of debit card can avoid the need to transfer funds from your Venmo account to your bank account.

There can be some fees associated with having a Venmo debit card. For instance, you incur a $2.50 fee when you withdraw funds from your Venmo account via an out-of-network ATM. There’s no fee for using an in-network MoneyPass ATM. A $3 fee applies for an over-the-counter cash withdrawal at a bank. Additionally, you can only withdraw up to $400 per day from your Venmo account.  

Venmo and Taxes

If you’re only using Venmo to transfer funds to friends and family members, taxes won’t be an issue. If, on the other hand, you’re using Venmo to collect payments for your business, you may be responsible for paying taxes. If you earn over a certain amount during the year, you need to include any Venmo payments you received for your business on your taxes. Before starting any business, it’s important to understand what your tax responsibilities are.

Venmo Scams to Watch Out for

If you’re wondering “Is Venmo safe to use?” the answer is yes, it’s relatively safe to use. Venmo uses encryption security to protect your personal information from hackers. Its robust security features are in place to keep your money safe.

Even these robust security features can’t stop all scammers. But there are steps you can take to avoid this type of bank account fraud. It’s important to recognize these scams before scammers take advantage of you. Below is a look at the most common Venmo scams.

Fake Products for Sale

One of the most common Venmo scams involves online sales. The scammer pretends to be selling something online. However, once you make a payment, you never receive the product.

Once a Venmo payment is processed, you can’t reverse it and there’s no way to get your money back. This is why it’s so important to only submit payments to people and businesses you know and trust.

Pretending to Be from Venmo

Another common scam involves scammers pretending to be Venmo. If you receive an email or text message claiming to be from Venmo, don’t automatically assume it is. Some scammers send these messages to try to steal your personal information, such as your account number and password. Once they have this information, they can hack into your account and make payments without your permission.

Using Your Phone

There have been reports of strangers asking a person to borrow their phone. Instead, they actually open the Venmo account on your phone to send money to an account associated with them. Unfortunately, trying to do a good deed by letting someone borrow your phone could cost you hundreds or thousands of dollars.

Why Does Venmo Require Identify Verification?

If you open an account with Venmo, you’ll have to prove your identity. This isn’t just a Venmo requirement. According to the Consumer Identification Program under the U.S. Patriot Act, all financial institutions must verify the identities of all their customers.

This program helps prevent terrorists from sending and receiving money and helps to stop money laundering. It can also help reduce the risk of fraud on Venmo. However, even identity verification can’t prevent all forms of fraud. It’s important to always remain vigilant and report any suspicious activity to Venmo.

Staying Safe with Venmo

There are several things you can do to protect yourself when using Venmo.

Monitoring Your Account

Be sure to periodically check your Venmo account for unauthorized transactions. If you notice any, report it to Venmo immediately.

Set Up Venmo Notifications

Receiving notifications as soon as there’s suspicious activity on your Venmo account may help prevent a scammer from accessing your account. Always be sure to have your notifications on for Venmo.

Secure Your Account

There are multiple ways to secure your Venmo account if you lose your phone or allow someone to use it. First, turn on the PIN feature. This step requires you to enter a specific PIN number before you can even open your Venmo account. You should also set up the two-function authentication feature to make it even more difficult for someone to hack into your account.

Choose Private Setting

You may not realize it, but Venmo automatically makes all accounts public. While other users can’t see the specific details of your account, they can see how often you use Venmo. To keep your account safe, it’s recommended to switch your account to private so only your friends and family members can see your information.

Don’t Keep a High Balance

It’s recommended to avoid keeping a high balance in your Venmo account. This way, if your account is hacked, you’re not at risk of losing too much money. Instead, take steps to transfer your Venmo balance to your bank account as soon as possible.

Don’t Share Phone

Even if you’re using the passcode and two-factor authentication features, it’s recommended not to let a stranger use your phone. Only those you know and trust should have access to your phone.

Only Enter Venmo Through the App or Website

Don’t activate your Venmo account through a link you receive in an email or text message. This could be a phishing email designed to steal your Venmo account information, such as your account number and password. Instead, only access your Venmo account through the Venmo app or website.

Venmo Alternatives

Venmo isn’t alone in the payment marketplace. Like most other payment options, it has a long list of rivals. Let’s line up three formidable adversaries for comparison.

Tip: PayPal is another popular payment app. Check out our safety review for more information.

App Name	Venmo	Zelle	Cash App
Parent company	PayPal	Early Warning Services	Square
Need a bank account?	No	Yes—but you can still use and download the app if your bank doesn’t offer Zelle	No
Who can you pay?	Friends, family members and other people you trust	Friends, family members and other people you trust	Anyone, including contractors, utility companies and charities
Debit card available?	Yes	No	Yes
Can you hold a balance?	Yes	No—but Zelle is connected to your bank account by default	Yes
How much does it cost?	Free if you use a bank account, a debit card or your Venmo balance. If you use a credit card, Venmo charges a 3% fee. Instant outgoing bank transfers cost 1%, while standard bank transfers are free.	No fees to send or receive money. Your connected bank may charge fees, however.	Free if you use a bank account, a debit card or your Cash App balance. If you use a credit card, Cash App charges a 3% fee. Instant outgoing bank transfers cost 1.5%, while standard bank transfers are free.
Any limits?	You’ll have a $299.99 weekly peer-to-peer limit immediately after signup. If you confirm your identity, your weekly limit will go up to $4,999.99.	Limits depend on the financial institution. If your bank doesn’t offer Zelle, your weekly transaction limit will be $500.	You can send or receive up to $1,000 during a period of 30 days.

Venmo Versus Credit Cards

What if you don’t want to pay via an app, and you don’t like carrying cash around either? In that case, your best bet might be a credit card. You’ll need to ask your waiter or your cashier to split the bill, but most merchants are happy to oblige.

Look for credit cards with the following perks:

• A low APR. Choose a low-interest credit card to save money on interest payments. 
• Cash back rewards. Why go for a standard credit card when you can get a little money back each time you shop?
• Balance transfer offers. Transferring your balance from another credit card? In that case, look for a 0% balance transfer offer.
• Credit builder cards. If you don’t qualify for an unsecured credit card, go for a secured card or a credit builder card to boost your credit score.

So is Venmo Safe?

Let’s recap. Venmo is a P2P payment app, and its parent company is PayPal. You can send money to friends, family members and other trusted individuals via Venmo. Some online stores accept the payment method, too. Venmo offers a debit card and—if you qualify—a credit card. You can fund your account with your bank account, a credit card or a debit card.

If you prefer not to pay by app and you don’t feel safe carrying cash, you might want to go with a credit card. Looking for the right credit card for you? Check out ExtraCredit® today. You’ll see select personalized credit offers when you visit your Reward It portal.

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