Venmo

Service

Venmo is a mobile payment service that lets users transfer money to each other. It follows a similar business model to PayPal. Venmo describes itself as a "digital wallet". Users sign up and create an account by providing basic information and bank account information using their mobile app or on the Venmo website and they can find others who have created an account. Friends and recipients of transactions can be found via phone number, Venmo username, or email.

Users have a Venmo balance that is used for their transactions. They can link their bank accounts, debit cards, or credit cards to their Venmo account. Paying with a bank account or debit card is free, but credit cards have a 3% fee for each transaction. If a user does not have enough funds on Venmo itself when making a transaction, it will automatically withdraw the supplemental funds from the registered bank account or card.

History

Venmo was founded by two friends, Andrew Kortina and Iqram Magdon-Ismail, who met as freshman roommates at the University of Pennsylvania. According to Kortina, the idea of Venmo originated when Magdon-Ismail forgot his wallet during a trip to visit Kortina. The process of settling their accounts was a hassle, so they started working on a way to send money through mobile devices. Their original prototype sent money through text messages, but they eventually transitioned from text messages to a mobile app.

In 2012, Braintree acquired Venmo for $26.2 million. In 2013, PayPal acquired Braintree for $800 million. Prior to October 2015, Venmo strictly prohibited merchants from accepting Venmo as a form of tender. On January 27, 2016, PayPal announced that Venmo was working with select merchants who would accept Venmo as payment. Initial launch partners included meal delivery service Munchery and ticketing app Gametime.

Social component

A unique aspect of Venmo is its social aspect. When a user makes a transaction, the transaction details (stripped of the payment amount) are shared on the user's "news feed" and to the user's network of friends. This mimics that of a social media feed. The transactions can be made private, but most users keep the default and do not change the privacy settings.

Security and criticisms

Venmo has claimed that its security is bank-grade, and that personal and financial data are encrypted and protected on secure servers to guard against any unauthorized transactions. These security claims have been questioned by journalists, security researchers, and the California Office of Business Oversight.