Today, Venmo ranks among the most downloaded apps in the App Store because of its convenient and speedy money transfer features. Millennials are primarily responsible for the company's meteoric rise; they have even turned the company's name into a verb, as in "I'll Venmo you for dinner."

Iqram Magdon-Ismail and Andrew Kortina, who had been roommates at the University of Pennsylvania, founded Venmo. The two were supposedly inspired to create their own POS system after becoming dissatisfied with the functionality of existing solutions while assisting a friend with opening a frozen yoghurt shop. The idea to sell MP3s of live performances via text message was then developed during a local jazz concert. Quickly, they had a working model of their money-transfer via text message concept and were on their way to shifting gears to a smartphone app strategy.

At first, Venmo was met with very little attention; however, in 2015, PayPal launched a massive marketing campaign under the slogan "Pay with Venmo," encouraging people to utilise the app instead of cash or credit cards at participating businesses. This advertising couldn't have come at a better time, as the use of cash is gradually declining in today's economy, and fewer individuals are using check- and ATM-based payment methods.

The Venmo Business Model

Users of Venmo are not charged any fees whatsoever, either when sending or receiving money or when signing up for Venmo's service. Interchange and withdrawal fees, interest on cash, check cashing fees, Pay With Venmo, and affiliate commissions on the cashback programme contribute to Venmo's bottom line. Using a credit card to purchase using Venmo will cost you an extra 3%.

With Mastercard's help, Venmo has introduced a debit card (M.A.). Therefore, users can spend their Venmo balance at any U.S. merchant that accepts MasterCard. If the ATM you use accepts MoneyPass, your withdrawals will always be free. A charge may be imposed otherwise. Then in 2020, Venmo introduced a credit card. Synchrony Bank issues the Venmo Visa Credit Card.

A Guide to Using Venmo

With Venmo, you can send and receive money instantly from your friends and family using the internet. Step-by-step, here's how it manifests itself: Shot by Julie Bang for Investopedia in 2019. It's interesting to see how many emoticons, like pizza slices and beer steins, populate the text fields on Venmo.

Why Everyone Uses Venmo Comparable to the meteoric rise of social media platforms like Facebook, Instagram, and WhatsApp, Venmo was propelled forward by word of mouth. Attractive to users are the following options:

Although credit card payments incur fees, Venmo does not charge its users to transfer or receive additional funds. It's no secret that among today's young adults, Venmo is one of the most widely used apps for dividing up financial obligations. For instance, if roommates agree to split the rent, they can use Venmo to pay their respective portions directly to the landlord.

When a user's Venmo balance is inadequate to cover a payment, the app will automatically deduct the necessary funds from the user's primary funding source (e.g., a linked bank account, credit card, or debit card) Even if the recipient isn't a Venmo user, you can send them money by inviting them to join the service.

With the "Nearby Payment" feature, users can send money to individuals who aren't on their contact list so long as they are physically close by. The "trust" function lets customers set up automatic payments for recurring bills.

Why Venmo Has Its Limits

Due to Venmo's current U.S.-only availability, no international transactions are permitted, even for U.S. residents. Even though the app boasts robust security measures, some users may still be reluctant to purchase using their phones.

Furthermore, as Venmo is only compatible with individual users' bank accounts or credit cards, it can't be used for business transactions. It is not recommended to utilise Venmo for making purchases. The business states that you can use your Venmo Debit Card online, in-store with a Q.R. code, or through participating apps on your mobile device to make purchases.

Finally, individuals can only send or receive a total of $6,999.99 per seven days. These limits apply to all debit cards, approved app, and Q.R. code purchases between individuals. Weekly person-to-person payments cannot exceed $4,999.99. This could be a problem if you need to transfer or receive a large quantity or multiple smaller ones over a week.

Internet Banking with Google Wallet

In terms of similarity and competition, Google Pay is most like Venmo. The only difference is that you may use Google Pay outside the United States, whereas Apple Pay is only available inside the country.

Methods of payment such as Apple Pay and Android The Apple Pay system, developed and marketed by Apple Inc. (AAPL), allows iPhone users to make in-store purchases by using the device's fingerprint scanner. This application is incompatible with Android devices. However, Android Pay was built by Google and is functionally identical.

Zelle is an instantaneous money transfer app recently released by a consortium of U.S. institutions. In addition to Wells Fargo, J.P. Morgan, and Bank of America, Zelle claims that many other central banks are also partners. Throughout 2020, the firm handled 1.2 billion transactions worth $307 billion.

Given the combined customer bases of the banks participating in the Zelle alliance, this new service has the potential to become the most formidable rival to Venmo. Averaging around $74 per transaction, Venmo may be used for minor purchases like meals, whereas Zelle is used more frequently for larger purchases like rent and utilities.