By Catherine Pritchard
You want to send your college student some money. (No, really, this time you do.)
So you tell him you’ll mail him a check. Or you’ll go to the bank and put money in his account. He can go to the bank or to an ATM to take it out.
“Just Venmo me, Mom,” he says.
And you pause, then say, “Do what?”
If you don’t yet know the term, it’s time to start getting used to it.
Venmo is one of several mobile services that can be used to make quick payments to someone or someplace else via your phone or your computer, using only the other person’s mobile number or email address. Other peer-to-peer mobile payment services include Apple Pay, Google Wallet, Square Cash and Zelle.
Venmo, owned by PayPal and founded in 2009, has become so popular with millennials that its name is now a shorthand verb in their conversation for using the service. Lots of teens, parents, Gen-Xers and others have gotten on board with Venmo or one of the other services. Research firm eMarketer says 31.4 million people used a mobile payment service in 2015. It expects that number to reach 63.5 million this year and 113.5 million by 2021. The firm estimates there will be more than $49 billion in mobile payment transactions this year. That number will only grow as more people opt for the ease of making quick payments without cash or a card. Meanwhile, Venmo alone handled $17.6 billion in transactions last year. In the first two quarters of this year, it reached close to that amount – $14.8 billion.
If you aren’t using a mobile payment service yet, someone you know likely is and you may want to join them.
Venmo has taken off among millennials for a couple of reasons. One is its convenience. For example, friends order a pizza. One can pay the bill with cash or a card while the others immediately pay him their share through Venmo. There’s no worrying about needing exact change or having to remember to pay later.
Venmo’s other big draw for young people is its social aspect. As on Facebook, each Venmo user has a personal news feed on which the payments he makes or receives are recorded. Dollar amounts aren’t listed but the other person is and so is whatever description they give to the transaction. That can be as prosaic as “electric bill,” as fanciful as “flight to the moon” or simply an emoji or 12 – say, a pizza slice. Users can make their Venmo feeds private, with each transaction visible only to themselves and the other participant. But relatively few people do that. Instead, they enjoy showing off what they’re doing and seeing what their friends are up to.
Venmo can be used as an app on your mobile phone or online on your computer. Either way, it has to be connected to a bank account, debit card or credit card. The service is free if it’s connected to the first two options. But 3-percent fees are charged on payments through an account connected to a credit card. Venmo says it has bank-grade security.
But many people aren’t comfortable with giving their bank account number to a third-party app. With that in mind and with an eye on the person-to-person payment market, many big banks are looking to a P2P system called Zelle. This system is operated by Early Warning, a risk management company, but in partnership with participating banks and credit unions, which include Bank of America, BB&T and Wells Fargo. Banks have said customers will pay no fees to use Zelle.
Other P2P services include Apple Pay, introduced in June. Users must add a debit card or credit card number to Apple’s Wallet app to use Apple Pay. They also must have an iOS device with iOS 11.2 installed. Transactions funded with a debit card are free; those funded with a credit card are charged a 3-percent fee. Square Cash has the same rules. Google Wallet is available online, through Gmail and on both Android and Apple devices. It must be linked to a bank account or debit card.
Keep your mobile device safe while you bank, shop or make payments online. Here are tips from the American Bankers Association:
- Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen.
- Log out completely when you finish a mobile banking session.
- Protect your phone from viruses and malicious software, or malware, just like you do for your computer by installing mobile security software.
- Use caution when downloading apps. Apps can contain malicious software, worms, and viruses. Beware of apps that ask for unnecessary “permissions.”
- Download the updates for your phone and mobile apps.
- Avoid storing sensitive information like passwords or a social security number on your mobile device.
- Tell your financial institution immediately if you change your phone number or lose your mobile device.
- Be aware of shoulder surfers. The most basic form of information theft is observation. Be aware of your surroundings especially when you’re punching in sensitive information.
- Wipe your mobile device before you donate, sell or trade it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen.
- Beware of mobile phishing. Avoid opening links and attachments in emails and texts, especially from senders you don’t know. And be wary of ads (not from your security provider) claiming that your device is infected.
- Watch out for public Wi-Fi. Public connections aren’t very secure, so don’t perform banking transactions on a public network. If you need to access your account, try disabling the Wi-Fi and switching to your mobile network.
- Report any suspected fraud to your bank immediately.