Venmo is a peer-to-peer payment platform that allows you to send money to friends, family members, and others quickly and conveniently. It also offers business payment services, which come with extra consumer protections.

If you're thinking about using Venmo, here's what you need to know about how it works, what you can do with the app, and the potential downsides to consider.

What is Venmo, and how does it work?

Venmo is a payment platform owned by PayPal. The service, which offers both a mobile and browser application, makes it possible to split bills, track your expenses, and pay other people and small businesses for goods and services.

Venmo also offers a debit card and a credit card, which you can use seamlessly with its peer-to-peer payment service. Here are more details about what the platform offers.

Peer-to-peer payments

With the Venmo app, you can send and receive payments from friends, family members, and other individuals. You can do this by linking a bank account, debit card, or credit card to your Venmo account.

You can find a person's profile by searching for their username or scanning their personal QR code. When sending or requesting money, you can include a note and set the transaction to be private, visible to friends only, or visible to anyone. The Venmo feed allows you to view past transactions between you and others, as well as your friends who make their payments visible.

Money received from others is deposited into your Venmo account. You can use the funds to make payments to others, or you can transfer it to your linked bank account or debit card. Standard transfers typically take one to three business days, but you can also request an instant transfer and receive the funds in under 30 minutes for a fee.

Business payments

Venmo also offers payment solutions for small businesses. You can pay by searching for the business username or QR code and using your linked bank account, debit card, or credit card. The platform also allows you to include a tip.

Eligible payments to businesses are covered by Venmo's purchase protection program, which protects both consumers and business owners.

If you're a buyer, for instance, Venmo can help make things right if you paid for a product or service and didn't get what you paid for or it arrived damaged. As a business owner, purchase protection prevents you from losing money to fraudulent claims from customers or unauthorized purchases.

Venmo Debit Card

With the Venmo Debit Card, you can easily spend the money in your Venmo account without needing to transfer it to a linked bank account first. You can also set up direct deposit from your employer to get paid directly to your Venmo account rather than a standard bank account.

The card also comes with up to 5% cash back on select merchant offers in the Venmo app, the ability to add your card to a digital wallet, and fee-free access to roughly 40,000 ATMs nationwide.

If you're a parent, you can also open a Teen Debit Card for your child, which gives you certain controls and can help your teen learn how to manage their money.

Venmo Credit Card

The Venmo Credit Card offers 3% cash back on your eligible top spending category, 2% cash back on the next, and 1% back on everything else. Eligible categories include:

• Travel

• Transportation

• Grocery

• Entertainment

• Dining and nightlife

• Bills and utilities

• Health and beauty

• Gas

Additionally, the physical card comes with your unique QR code, making it easy for others to scan your profile and send you money when splitting a bill. Rewards are deposited directly into your Venmo account. The card has no annual fee.

How much can you send with Venmo?

Venmo has weekly limits on how much you can send to other individuals and authorized businesses. Before you verify your identity, the combined limit is $299.99 per week.

After you verify your identity, however, the limit jumps to $60,000 for person-to-person payments and $7,000 for in-store, online, and in-app purchases.

You can verify your identity through the mobile app's settings. If the automated verification process doesn't work, you may need to provide documents verifying your name, date of birth, proof of address, and Social Security number or individual taxpayer identification number.

Does Venmo cost money?

It doesn't cost money to set up an account with Venmo, and if you send money with a linked bank account or debit card, there are no transaction fees. There's also no fee for a standard transfer of your Venmo balance to your linked bank account.

However, there are some fees that you may run into depending on how you use the app:

• Credit card transactions: If you send money to other individuals with your credit card, you'll incur a 3% transaction fee (this fee doesn't apply for payments to businesses).

• Instant transfers: There's no fee for standard bank transfers, but if you want an instant transfer, the fee is 1.75% of your transfer amount, with a minimum of $0.25 and a maximum of $25.

• Cryptocurrency: You can buy and sell cryptocurrency directly in your Venmo account, but you'll incur a fee based on the purchase or sale amount. It can be as much as 1.8%.

Is Venmo safe to use?

Venmo uses various security and privacy settings to make it a safe payment platform. However, there are some considerations for people who use the app, particularly if you plan to maintain a balance with Venmo instead of transferring it to your bank account. Here are some features to keep in mind:

• Data encryption: Venmo is a regulated money transfer service that's required to comply with certain laws surrounding data security. In particular, the company encrypts your financial account details to prevent hackers from stealing it.

• Fraud monitoring: Venmo monitors your account activity to help you identify fraudulent transactions, and you can get help if someone uses your account to send or transfer money without your permission.

• QR codes: To make it easier to send and receive money, Venmo provides users with a QR code that users can scan to ensure they have the right profile.

• Reversals are limited: If you accidentally send money to the wrong profile, Venmo offers little recourse. The only way to reverse a payment is if the recipient gives explicit permission to do so, their account is in good standing, and they have a sufficient Venmo balance to complete the transaction.

• Purchase protection: As previously mentioned, consumers can take advantage of purchase protection with eligible merchants on Venmo.

• Transaction settings: Venmo has a social media aspect that allows your friends and even the general public to see certain details about the payments you send and receive. However, you can set your transactions to friends only or private to keep your financial decisions safe.

• FDIC insurance coverage is insufficient: Venmo isn't a bank, so any money you've received in payments is not covered by FDIC insurance. If you elect to have paychecks deposited into your Venmo account, those funds are held with partner banks and are eligible for FDIC coverage. However, it only protects you in the event that the partner bank fails. If Venmo fails, you may lose your funds.

Overall, Venmo is generally a safe payment platform, but it's crucial that you make sure you're always sending money to the correct profile, taking advantage of purchase protection, and transferring money you receive to your bank account instead of storing your money with Venmo.