How Venmo Makes Money: Complete Guide in 2022
It is not abstract to ask how popular apps make money. This curiosity may stem from your frequent use of the app or its security.
Venmo has become a household name in the P2P economy, and considering how it makes money before using the app is actually a wise thing to do.
This article on "How Venmo Makes Money" goes beyond clearly stating the source of income, it also analyzes what the app does and how safe it is.
Before we get into the details of how Venmo makes money, let's pay attention to these details.
What is Venmo?
Venmo is a P2P payment application that allows fast payment and easy exchange of money directly between individuals. This payment app is readily available on iPhones and Android phones. It was founded in 2009 as an SMS payment delivery system.
In March 2012, Venmo introduced a platform with an integrated social network. This was in order to capitalize on the growth of the P2P economy.
In less than six months from March 2012, Braintree and other e-commerce giants bought Venmo for $26.2 million. A year later, Braintree was acquired by PayPal Holdings Inc. for $800 million .
During this period, Venmo was already enjoying a substantial increase in user numbers; hence the monetization of Venmo's user base by the new owners.
In a nutshell, Venmo is a free mobile app founded by Andrew Kortina and Iqram Magdon-Ismail. Currently owned by PayPal, the app is used to send and receive money online by US residents.
How does Venmo work?
Getting to know how Venmo works gives a broader knowledge of how they make money. Basically, Venmo is an app available on iPhones and Android phones, so users need to download and install the app on their phones first.
Then, users proceed to link their Venmo accounts to their credit card, debit card, or checking accounts. With that done, Venmo users can now trade funds online, with Venmo being the virtual tax broker.
Obviously, Venmo acts as an intermediary between the two bank accounts of the two users carrying out payment transactions.
On a more simplified note, Venmo is an app used to transfer and receive funds. However, funds transferred through this app can be kept as a Venmo balance or transferred back to a bank account or credit card.
Is Venmo a social media?
Venmo is quite different from other P2P payment apps due to its integration of social media features. The social element and the financial element of Venmo merge to provide a beautiful user experience.
It may not necessarily be a social media app, but it incorporates social media features and playful gestures to make transferring funds interesting.
How does Venmo make money?
You might be wondering how Venmo makes money considering the app is free to use and download. Well, some transactions on Venmo cost money.
For example, linking your Venmo app to your credit card incurs a fee of 3% of the total transaction value.
This 3% charge on credit card transactions is one of the ways Venmo makes money from its customers.
Additionally, the Venmo app makes money by charging businesses 2.9% of the total money a customer pays for their goods and services. This means that there is a 2.9% charge on businesses each time customers use the Venmo API to pay.
This source of income will take another leap as Venmo has now entered into a partnership with Uber. As a result, customers can now pay for Uber and UberEats with Venmo, attracting a 2.9% merchant transaction fee.
The way Venmo makes money will be more profitable, as its future plans to increase the use of Venmo for transactions between customers and businesses will generate more revenue.
In a nutshell, Venmo makes money from the following items listed below.
3% fee on credit card transactions
2.9% fee on cases when they receive payment from their customers using Venmo.
0.30% per transaction on companies
How safe is Venmo?
Applications linked to bank accounts are vulnerable to security breaches. However, the owners of these applications and platforms directly linked to consumer bank accounts apply the highest standards of protection.
Currently, Venmo uses data encryption technology to protect users from unauthorized transactions. Additionally, user login information and security PINs are all stored on servers in secure locations.
Despite these security measures, the app has fallen prey to hackers and scammers. The Venmo scam occurs when hackers gain access to a user's account, now they can easily transfer a user's Venmo balance to a neutral bank account.
Also, crooks can change a user's email address and redirect a user's notifications. Therefore, the real user remains unaware of the transactions made during this period.
This explains the Venmo scam stories of users losing up to $3,000. To curb this threat, Venmo allows users to set up PIN codes for mobile app transfers.
Therefore, strengthen security measures to protect each user's Venmo account.
Complete guide on how to protect your Venmo user account?
Virtually every application related to bank accounts for online transactions is exposed to security vulnerabilities.
As the owners of these platforms attempt to protect your funds, you can adhere to this comprehensive guide below to combat the devastating effects of hacking.
Store minimum sums in the Venmo balance
Transfer Venmo transactions to bank accounts or credit cards
Use Venmo with your friends and family
Conceal transaction history on Venmo by opting into its social network.
Change your social media settings to "private" as the public settings will post transactions to the stream.
Venmo Review: Is It Legit or Scam?
Generally, P2P payments are convenient, quick and easy to use. Peer-to-peer payment helps individuals transfer money from one person to another at the click of a button.
Venmo is one such app that makes transactions easier. Therefore, for some reason, it's a good app to have. Venmo as an app is not a scam zone.
In fact, in the fourth quarter of 2019, Venmo had $40 million with a net payout of $29 billion.
These statistics indicate that Venmo saw a 56% year-over-year increase. Around $300 million has been stipulated as Venmo's revenue for 2020.
Most Venmo reviews describe successful peer-to-peer payments. Moreover, the social media integration provides an awesome user experience. Regardless of all the cool features, it is not advisable to leave large sums of money in Venmo or leave large sums in Venmo account balance.
Notes consultant Richard Crone when reviewing the Venmo app has this to say:
"Partnering with Venmo is like partnering with a credit card processor, but with a lot more benefits."
“Retailers spend a lot of money to get you liked on Facebook and follow them on Twitter. But they could get these things for free, as a byproduct of authorizing Venmo payments. People can see where their friends have been and what they have purchased, which turns users into ads for businesses, among a highly desirable target demographic.
Richard Crone
Clicking the button will redirect you to where to download the Venmo app.
DOWNLOAD THE VENMO APP
Conclusion
The Venmo app is free to download and use for peer-to-peer transactions. Just like most bank account-related apps, it also faces some challenges: vulnerability to hackers.
This article reviews the Venmo app, how it makes money, and provides a comprehensive guide on how to protect Venmo user account.
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