While many college students were out spending away this past Saturday, one college student was making money in what may have been the easiest and most clever way possible.
Sam Crowder, otherwise known as Venmo user SamC227C, held up a sign at a football game this weekend asking for money. That sign appeared on ESPN’s College GameDay and Sam has received payments from more than 2,000 users. (Photo credit: @CollegeGameDay Twitter account)
While Venmo is gaining traction with millennials, both parents and kids alike can benefit from this convenient and easy-to-use payment system. However, before signing up to start requesting “beer money” like Crowder, here are some important things you should know about the latest app.
What is it?
Venmo is a digital wallet which can be used both to make payments as well as to request payments from friends (and family!). It is a free mobile application for both Android and iOS users.
How does it work?
Venmo users must link their account to a checking account, debit card, or credit card. Once linked, users can find friends by searching their name or username. If a person is added as a “friend” on Venmo, their transactions will appear on each other’s timeline. This is where Venmo’s social media aspect appears—I can now like and comment on my friend Grace’s apparent weekly pizza binge. Venmo also has a timeline of your own transactions, so there is never any discrepancy of whether or not Grace paid for her pizza this week.
Users can also make payments to people they choose not to be “friends” with, as well as request other users for payments. This feature allows everyone to avoid the awkward “you owe me” conversations. Once a payment has been made, the money is transferred to your Venmo account. The money will sit in your Venmo account until you use it to make a payment, or until you choose to transfer the money to your bank account.
Is it safe?
One of the drawbacks of Venmo is that yet another company has access to your banking information. Venmo’s owner, Braintree, who is owned by Paypal, has yet to suffer any major security breaches. However, this is not to say one will never happen. Venmo does use bank-level security and data encryption to prevent breaches and allows users to set up a PIN code to prevent unauthorized transactions.
Lastly, Venmo users should be aware that payment on the app is not instant. Much like a check, a person can cancel the transfer of funds before it occurs. For this reason, Venmo should only be used with trusted individuals and not for purchases from strangers.
What’s the catch?
If all this seems a little too good, you may be right. At the end of the day, Venmo has to make money somehow. In order to do this, a 3% fee is charged on all credit card transactions. Another way in which Venmo generates revenue is by charging a fee for their Venmo API services which let other programs use Venmo to make payments. However, this 2.9% fee is paid by the businesses who use it, so the everyday user is not affected.
The bottom line is that Venmo is a convenient alternative to cash and checks. And, for those who chose to avoid using a credit card, the service is free. Splitting the bill with friends, paying your children for their chores (or even sending them that beer money), has just gotten much easier for the average person.
Guest Blogger: Joan Lawlor
Joan is a full-time University of Wisconsin—Madison student and helps write for the TDS blog on the side. Joan has a love for travel and most recently returned from spending five months abroad in Europe where she visited 13 countries.