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My sister uses the Venmo pay app a lot, so I wondered what all the hullaballoo was about.

WHAT IS THE VENMO PAY APP?

In 2009, Andrew Kortina and Iqram Magdon-Ismail founded Venmo.  The pair needed to devise a way to transfer money quickly and easily to each other. 

Aiming to eradicate the process of transporting money, Venmo was born to provide for cash convenience. Braintree purchased Venmo in 2012, and Braintree purchased PayPal in 2013. 

Partially a mobile digital wallet, and partially a feed from social media, Venmo asks for comments on all transactions, and these comments, newsfeed style, are posted for browsing by friends.

There is a comment box that is used by people to put fun stories and jokes relative to the relationships of the ones posting. 

In essence, the app adds a fun element to last night’s dinner payment to a friend. In addition, privacy settings enable users to monitor what transactions are made visible.

WHAT MAKES VENMO DIFFERENT?

The Venmo pay app was created to allow friends to split bills easily, whether it’s for movies, dinner, tickets, and even rent! Or what if you have moved to another state and need to send money back home?

Venmo sets itself apart by including social network interaction capabilities.  

When a user makes a transaction, the details of the transaction (sans the payment amount) will be communicated to the user’s news feed and your network of friends. The process is not unlike a feed in the social media.  

The app offers a “world wide” feed, a feed for “friends only,” and then a private feed is available. Venmo promotes social interaction with the software by using jokes or emojis.

Initially, Venmo required new users to sign up via Facebook, so that it was easy to find peers that they wanted to pay. The application allows users who are not friends on Facebook to search by username and telephone number.

Profile photographs, usernames and history of Venmo transaction are personalized. Payments can be done privately, but most users retain the default settings and don’t change their privacy.

Venmo provides no protection either for the buyer or the seller. 

Venmo comprises three feeds: public feed, friends feed, and a private feed. All payments of Venmo are exchanged in public by default.

Everyone opening the app, including those not using Venmo themselves, can access the posts that have been publicly shared. The privacy settings can be changed to allow all posts to be shared or kept private only by user Venmo contacts. 

If posts are shared only with contacts, the posts are still shared with friends and only the two parties involved in the transaction see private transactions. If there are differing privacy settings for two users participating in a single transaction, Venmo shall be more restrictive. 

For each transaction, users can override their full preferences even after a transaction has been completed.

HOW DOES VENMO WORK?

The specifics of the payment in text, Emoji or both will be given for each transaction. It is necessary to complete this transaction but Venmo does not impose content requirements (for example, someone can describe it as “nothing”). 

If a specific charge is entered as definition, Venmo recommends the use of an emoji. In total, at least one emoji is included in 30 percent of Venmo’s transactions.

Irrespective of the privacy of a transaction, only the amount of the transaction can be seen by the two people involved in the transaction. 

In the feed transactions are continuous and endlessly scroll. If a user or his / her contacts have many transactions, it may be difficult to review a previous transaction.  

The social model of Venmo pay app has attracted the attention of researchers. Why?  Because the social feed in Venmo differs from other social networks in that financial transactions drive the activity as noted by a research group from the University of Washington. 

A user could make an insignificant transaction for a post (example: for $0.01 or $0.02), but only one study participant reported doing such a transaction. Moreover, it is not necessary to send or receive money to read or share a transaction message publicly or with friends.

 In Venmo people transact with friends and business through the app. Public transaction analysis identifies a range of usage patterns ranging from regular users to occasional users who use Venmo with a small friend group for a few items.  

Part of the appeal from Venmo is that it replaces an impersonal private transaction that takes place on PayPal with a network of friends to interact with. The website of Venmo also states explicitly that the service “is meant for the payment of friends and people who trust one another.” 

The transfer of money between Venmo accounts is immediate and can not be undone with a system designed to emulate cash payments.

The corporation may intercede, but the receiver must agree to the reimbursement. 

The Venmo pay app on what it does, is really good. If you owe money to a friend, it replaces cash. You can not pay Venmo for Netflix Inc. but you can pay half of Netflix’s bill to your roommate. 

Venmo has ventured into traditional banking services, but not as advanced as PayPal has. 

Venmo can be used free of charge. The 3% transaction fee charged by the card company is subject to credit card payments but the debit card payments or the payment of user balance costs nothing.

IS THE VENMO PAY APP SAFE?

Of course, there is nothing completely safe connected to the internet. 

However, apps directly related to bank accounts of customers, such as Venmo, must therefore follow the highest safety standards. 

Venmo uses data encryption to protect users from unauthorized transactions and to store user information in safe locations on servers.

Venmo also allows users to configure a PIN code for mobile applications, but does not force users to configure one by default. 

Such steps might at first seem to be adequate, but hackers and scammers have circumvented them.

Venmo has been repeatedly criticized for user account infringements and painfully slow customer service security. 

Venmo’s insurance security, encryption, and liability insurance are supposed to protect users against losses.

But alas, hackers can easily change passwords, linked email addresses and bank accounts, unknown to the legitimate user, after accessing a user’s account. 

This allows the hacker to spend on an account and move the Venmo balance of the client to a new bank account.

The hacker may redirect the user’s transaction notifications by changing the associated email address leaving the innocent user in the dark until the bank informs them of any change in the balance, which may not not happen until several days after the theft. 

There are reports of users who have lost in excess of $3,000. Another security risk is the use of Venmo text message (SMS) to inform users of a charge. By replying to the Venmo SMS you can approve a fee by entering a six digit code from Venmo. 

One researcher was reportedly able to make unauthorized payments using SMS notifications from the platform by exploiting the security weaknesses in operational systems with which 

Venmo needs to interact in order to send notifications such as the iOS from Apple. 

The method the researcher used is relatively easy to replicate as far as hacks are concerned. It is therefore no surprise that hacked Venmo accounts are prevalent. 

Reddit and other online Forums are packed with messages from users who demand assistance after seeing that there Venmo accounts have been hacked. 

Losses can reach $2,999, which is on the Venmo account the maximum balance a person can have before moving from the platform.

ARE THERE PROTECTIONS FOR VENMO PAYMENTS FOR LOSS, FRAUD AND THEFT?

According to Lauren Saunders, Associate Director of the National Consumer Law Center, Venmo’s transactions WILL BE PROTECTED under the Electronic Funds Transfer Act, which will come into force next year.

 The rules cover debit cards are the same. If you report the problem to Venmo immediately – say in 60 days – in the event of an unauthorized charge on your Venmo account. 

Be aware though, most likely this will not include cases where you have sent the money – only in cases where another person without your knowledge or permission has accessed your account.

When you have sent money via Venmo into anything that turns out to be a scam (fake tickets, faulty goods, etc.), Saunders argues that the authorization should also be considered fraudulent and “this payment is not legally secured.” 

Please note this very important tip: Don’t pay anybody you don’t know with Venmoeven Venmo says it in all caps on its website. And do not make use of it, even if you know the vendor, to pay for the products that have not provided or checked you.