Venmo is a third-party social payment app you can use to exchange funds with people and businesses. Unlike Zelle, which is offered in the Core Bank mobile app, Venmo functions as a digital wallet, allowing you to accrue money in your Venmo account to pay for future purchases. You can access your Venmo account using the mobile app or Venmo’s website.
Many people use the Venmo account and keep their cash in it while the business invests it in other businesses and gives you nothing. The Venmo app is not FDIC insured so if Venmo were to go bankrupt, they wouldn’t be required to give you your money back.
To use Venmo, you set up a free account to send and receive money on the Venmo platform. When another Venmo user transfers funds to you, the money will arrive in your account. You can then choose to keep the funds in your account or transfer the money to a linked bank account.
What Are the Cons of Venmo?
- Funds deposited are at a higher risk with the uninsured Venmo unlike making deposits into a bank account backed by the FDIC.
- No ability to earn interest on money on money deposited with Venmo.
- More susceptible to scams and privacy may be compromised unless you adjust privacy settings as the app functions are similar to social media. Venmo stresses that you should send money only to trusted recipients, not strangers, to avoid being ripped off.
Some other things to remember about Venmo is that there are fees for some services. With Venmo, receiving funds takes one to three business days—unless you pay a 1.75% instant transfer fee. There are also transaction limits, such as a weekly maximum of $4,999.99 for person-to-person payments. Zelle also has some transaction limits, but they’re set by your bank or credit union, not by Zelle.