Difference between revisions of "Venmo"

Revision as of 15:38, 20 April 2017

"Venmo"

"Screenshot of the Venmo application" text Type Mobile Payment Application Launch Date 2009 Status Active Product Line Mobile Payment Application Music Sharing Application Platform iOS Android (operating system) Web Website www.venmo.com

History

In 2012, Braintree acquired Venmo for $26.2 million.^[3] Then, in 2013, PayPal acquired Braintree for $800 million in an all-cash deal.^[4] In Quarter 2 of 2015, company earnings showed that people sent $1.6 billion over Venmo.^[5]

The founders of Venmo are Andrew Kortina and Iqram Magdon-Ismail. The two met at the University of Pennsylvania in 2001 where they were randomly assigned to be each other's roommates. Throughout senior year and for a few years after graduation, they began working on various projects and launched Venmo in August 2009. However, their original idea was a music startup where people could send a text to a band and then receive an [MP3] via email. The idea for sending payments with technology supposedly came during a night where Magdon-Ismail forgot his wallet and owed Kortina money. The original design was for users to send and receive payments via text message. ^[6] This idea eventually evolved into becoming today's version of Venmo, where users can send money using the mobile application or web.

Service

Account Set Up

Users begin by setting up a Venmo account using either an e-mail address or their Facebook account. Next, users must choose how they want to pay other users.

Venmo's "New Transaction" page

There are three options for this:

   *Venmo balance
   *Credit/debit card
   *U.S. Bank account

The Venmo balance option is when the user has money in their Venmo account from other users who pay them. This money can then be recycled and used to pay others. The credit/debit card option is when users connect their Venmo account with their credit and/or debit account. Venmo supports most major debit cards, but charges a 3% fee for credit cards and some debit cards issued by smaller banks.^[7]Receiving money is always free. A user can also set up their Venmo account by connecting it to their U.S. bank account, from which can directly transfer funds to be used in the app.

Transactions

Once a user's account is set up, users can go on sending and receiving money on Venmo using the pay option that they have chosen. There are a few ways for which this transaction can occur. First, a user can click the new payment button in the top right hand corner that takes them to the "New Transaction" page. He or she can then search the name of which they want to pay or request money from. After choosing, the user must enter an amount to either pay or request, and enter a comment describing the payment.^[8] The user pushes the button for whichever option they choose and confirm before sending. The user on the receiving end is informed with a notification, e-mail and/or text message. Another way to make a transaction is to visit another user's profile directly. After navigating to the receiver's profile, the user must press the blue Pay or Request button, which goes to the "New Transaction" page with the same process as before. To find your friends easily, Venmo uses the contacts in the user's phone to find others. A user's contacts will appear in the Venmo address book which allows to search for someone by username, phone number or email.^[9]

Once a user has a balance in their Venmo account, they have the option to transfer it to their bank. This only works if the user's Venmo account is connected to either their checking or savings account. To transfer the balance, the user must click the hamburger navigation button in the top right corner and click "Transfer to Bank". This pulls up the "Transfer to Bank" page where the user can choose how much they want to transfer, which bank account they want to transfer it to, and then hit the "Transfer Now" button. The transfer process takes one business day, which is stated below the "Transfer Now" button and Venmo notifies the user when that takes place.^[9]

News Feed

Venmo has a news feed feature for its users. There are three types of news feeds:

Buttons of different News Feeds

   * Global
   * Friends
   * Personal

The global news feed shows every request or payment that is made on Venmo in the order of their occurrence. The friends news feed shows the user transactions that occur between the user's friends making a post or others. This difference is distinguished with a symbol on the right side of each post, with a symbol of friends for the user's friends and the globe for others. Each post shows between whom the transaction was made, a photo of the sender, the comment and the time it occurred. It does not state the amount being transferred. The user is also given the option to like or comment on the post. Often times users like each other's post to show that they are aware they received the transfer. The personal news feed is specific to each user and shows their transactions that have occurred over time. The major difference with this timeline is that is shows the transaction amount which is green when money is received and red when a payment is made. It also shows the user when a transfer has been made to their bank.

Business Model

While as a platform Venmo is not a revenue-generating entity of PayPal, the child company still extends the reach of PayPal by a significant amount. As of early 2017, Venmo was only responsible for around five percent of PayPal’s total payment volume^[10], but its mobile capabilities are far more popular than PayPal's original application. The social nature of Venmo's platform has allowed it to take off among younger audiences in a way that the PayPal application did not manage to do. While Venmo itself is a transaction fee-free platform for payments made from user bank accounts or existing Venmo balances, payments made by debit and credit cards do include a three percent transaction fee^[11]. Venmo continues to be a strong competitor against similar mobile payment methods like ApplePay, Google Wallet, and various other mobile payment options available through social media platforms (Facebook offers a payment option through its messenger service, Twitter offers Square Cash through its app, and Snapchat recently released SnapCash as a method of in-app payment)^[12]. In coming years, Venmo is looking to expand its reach in various contexts, most prominently by means of in-store payment options that will shift the tide further away from traditional in-store payment methods.

Ethical Implications

Personal information and financial information is protected by Venmo's security systems and data encryption. Financial information is protected on secure servers.^[13] Because Venmo is a mobile application, its security goes beyond just the application. Phone security remains an issue because it is the platform for the application. There has been debate about how secure Venmo really is. Unlike other mobile applications, Venmo experiences another level of security due to the fact that it deals with bank accounts and confidential and sensitive information. Venmo does not have a phone line to deal directly with customer issues regarding stolen funds or other security concerns. ^[14] This means that customer that need urgent help may not receive immediate attention because Venmo relies on an email system that is known for being slow to respond.^[15] This process is very slow and unfair to Venmo users, especially given the fact that Venmo users transfer over $1.6 billion dollars in just a couple months and has the potential of hundreds of incorrect transactions per month.^[16]

Security

Although PayPal, Venmo's parent company, has two-factor authentication for every transaction and password reset, Venmo does not. ^[17] This means that anyone with access to applications on someone else's phone could potentially transfer large sums of money through Venmo in an instant. In July 2011, Venmo released an iPhone application update, which added a passcode lock features. Users can now lock their Venmo app with a four-digit PIN or Touch ID (for iPhone 6 users).^[18] If the user chooses to create a PIN for their account, they will be asked for their PIN or Touch ID every time they log in or open the app.^[19] This added security measure serves to provide a little more security for Venmo users. Venmo limits users to $300 transfers per week or $2,900 with identity verification. Although Venmo has these limits there have been instances were users were able to transfer over the $300 limit without identity verification and it went through. That can be dangerous especially if someone else were to get into someone else's Venmo account to send large sums of money. The app's convenience is why so many users are not too worried about anything bad happening to them, which is something Venmo has to realize. Yes, they have a great app that helps a lot of people, but it is their job to also make sure their app is secure. ^[20]

E-Hackings

There have been a few alarming cases of security breaches in Venmo's Platform. One of the victims of these security breaches was a senior at Cal State Long Beach who lives in Westminster, California. The 21 year old was robbed of three thousand dollars and later alerted by his Chase bank account, but not by the app. He claims he was not alerted when the other person logged on to his account, and did not get a notice of the transaction. Since the event, Venmo has updated their policy, as now they send emails to alert you of when a transaction has been completed. Another victim of hacking was a professional poker player by the name of Moshin Charania. His account was hacked for more than two thousand dollars. He was later reimbursed by Venmo, but the issue of account safety was still brought into question.^[21]

An inappropriate Venmo user's posts.

Privacy

Because Venmo also has a social aspect associated to it, it deals with many of the same issues that social media sites deal with. Venmo has a “news feed” where users can see various transactions split into public transactions, friends’ transactions and personal transactions. Venmo has put a feature that allows a user to decide if a payment will be public, private or just for their friends. While this option is helpful for Venmo users to protect their privacy, some users do exploit the system by naming their payments inappropriately and using the public option to catch other people's attention for fun.^[9] Venmo does not filter out most inappropriate content, which can be ethically damaging and scarring to innocent users, especially younger ones.

Venmo also allows users to link with other social media sites like Facebook, Twitter, and Foursquare which would then share their payments and posts on that social media. ^[22] This social sharing will increase the privacy issues that Venmo has to deal with because it not only has to contend with the privacy of users on their own application, but now other social media sites are involved as well. Within a Venmo user's social network, the company provides three levels of sharing privacy (public, friends only, or private) that can be toggled on the fly. Being transparent and open about privacy and sharing is a key factor for Venmo as their business deals with finances, which is an intrinsically private matter for most people.

What a Venmo newsfeed might look like.

Case Study about Transparency

In one case, Chris Grey, a 30-year-old Web developer from New York City saw a notification from Chase bank that debited his account $2850. He opened his Venmo account to see that his password no longer worked. After resetting his password, he was able to see that a new address was entered under his account and notifications had been disabled. The payment was made to a user he didn't know. Venmo did not notify Grey of any of this suspicious activity. Grey said, "I never got an email that my password had changes, that another email was added to my account, that another device was added to my account, or that a lot of my settings had changed." ^[23] Venmo does not notify users when login settings have changed, which can be a major ethical issue when accounts get hacked and the user does not know about it until it is too late.^[24] To counter this, Venmo allows a user to set email, text, and phone notifications to receive instant updates on when a payment is made through their account. However, the process to correct a hacked or incorrect payment is still relatively slow.

See Also

References