Barter to gold to cash to checks to . . . Venmo ???
"Can I pay you using Venmo?"
Odds are high you've heard that question from:
- your lunch friends
- your adult kids
- and everyone else in your circle
Maybe you've taken the plunge and you now "Venmo".
But perhaps you are thinking about it and need to know more. Is it right for you? We will explore this topic more in the coming weeks, but here's some food for thought to get you started.
What and Why is Venmo?
This basically answers the need to carry around a checkbook when you need to pay friends, relatives, and acquaintances that don't have a more business-like method in which to pay them.
In business jargon, this is a P2P or "Peer to Peer" payment method. It's an app that you download to your smart phone and you pay your friends money you owe, and in turn, they can pay you as well. The need to carry around a checkbook is reduced with this type of system, if both transaction parties are participating.
Are there other companies that have this service too? In short, sure. Venmo appears to be one of the more talked about, but WePay, Zelle, Square are all out there just to name a few. Your bank might also be getting in on the act.
How does this Peer to Peer System (P2P) work?
Each business will have nuances, but generally you can think of it like this:
- Download the app (generally they are free)
- Sign Up (more on this by reading below)
- Link it with your credit card or your bank account
- Tie it in with your contacts (Facebook, etc.)
- Receive payments and send payments as needed
5 Points to Ponder
- The FDIC. The USA FDIC government insurance program, insures bank deposit accounts up to $250,000 per account. Your money left in most P2P's, such as Venmo, do not have that backing. Consider moving your balances to your bank account swiftly if not needed in your P2P. P2P's are actively working to make this transfer to your bank account fast and seamless.
- Verify. Verify, and then verify again that you are paying the correct "Suzy" or the correct "Bob". If you have multiple acquaintances with the same first name, it is much easier to make this mistake than you think. Just remember how often you might have texted the wrong "Mary" and you'll realize the validity of this. Companies are now introducing a "code" system to reduce these errors. Consider uploading your photo so people will be less likely to send you money meant for someone else.
- Habits, habits. When you are expecting to receive a payment, make yourself an electronic reminder so you can make sure you've received the payment.
- The Debit Card. Well, you could probably see this next function of P2P cards coming. Venmo has introduced the "Venmo Card" which basically works like a debit card where you can purchase directly from stores from your Venmo balance. Again, we remind you of the FDIC insurance program for bank accounts.
- Protection. Check your P2P choice. Does it offer buyer and seller protection like your credit card does? Venmo currently doesn't, which is why we suggest using this payment for those you trust and know. Translation: don't use this for Craig's List purchases and the like.
- BONUS POINT. When you sign up, study all your app options. Set up that "swipe" notification to let you know every time a transaction occurs. While you are at it, as you set this up, learn how to quickly disable/suspend your P2P quickly should problems arise. Remember, this is tied to your bank account or credit card. Locate all "privacy" selections and strongly consider them. These privacy settings might be able to keep your payment transaction seen by just you and your transaction partner.
Reminder for our Teens and Nearly-Flown's
Let's face it. Our kids are far more trusting of technology than we probably are. We suggest that if/when the time comes for you to explore this with your college child, you cover privacy, swipe notifications, codes, and anything else available. This is an exploding market with new features and protections occurring all the time. As always, read the fine print on your choice.
That's it for now. As always, we love helping parents and young adults with timely information. Every one is busy and when we can bridge that learning gap for you, we've hit the sweet spot.
Have a great rest of your week!
You CAN Have Success in the Middle of it ALL
Pam and the JellyGeneration Team
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Who Is JellyGeneration?
Pam Hardison, MBA, BBA in Finance and Business Education, has created and co-owned a national mail order catalog which at one point was the 21st fastest growing customerbase in the nation. As a mom of two college-post college daughters, considers it a privilege and to meet other students and parents along the same road. After teaching high school and college students for years, her commitment to helping them with topics most schools can't cover is the light that drives her.
Holly Powers, Attorney-At-Law (Jameson & Powers, P.C.) has been actively practicing law since 1985 and is a shareholder with the law firm of Jameson & Powers, P.C. The firm specializes in transactional law, health care law, and general business law. Holly has taught students precepts concerning the legal world for over 10 years. With 4 children, she understands what teens need to know and has a passion to help others faced with teens and aging parents.
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