Is Venmo Safe for Sellers? Security Features Every Business Should Know

Is Venmo safe for sellers? Many business owners aren’t so sure, especially considering the payment platform’s history with scams and fraudulent transactions. With businesses increasingly relying on mobile payments, today’s merchants need to understand Venmo’s safety features and potential risks now more than ever.

Venmo was initially designed with the intention of simplifying monetary transfers. In its current incarnation, it works exceptionally well for exchanging currency between friends and relatives. In 2021, Venmo started offering business profiles with additional features, thus enabling business owners to receive payments for goods and services. Alas, accompanying this increase in convenience is an enhanced sense of risk.

With cyber threats looming in every digital payment space, it pays to be aware of available security options. Let’s explore Venmo’s safety features so sellers can ensure their transactions stay safe while using the platform.

How Does Venmo Work and Is It Safe for Merchants?

Venmo is a mobile banking application that facilitates money transfers between peers and, in specific cases, payments for goods and services. After users link a credit or debit card, they can send money to friends and family through the app. Once a transaction is complete, it appears on a public transaction feed. You can, however, change your privacy settings to render transactions private instead of public.

Venmo for Business offers additional features. Businesses can receive instant payments for goods and services while benefiting from the platform’s social aspect via its transaction feed. However, this payment processing incurs a fee: Venmo for Business charges sellers 1.9% of the transaction amount plus $0.10 per transaction.

If you already use PayPal for Business, you can accept Venmo payments on your eCommerce site without additional fees or setup. Customers click on the ‘PayPal Checkout’ option, at which point they will pay with their Venmo account. Post-payment, customers receive an automated Venmo-branded receipt.

If you do not have a PayPal account, you must set up Venmo for Business payment integration. This process is more complicated because you first need to acquire Braintree, a PayPal brand that is essentially the engine that processes these transactions.

Before logging into Venmo to set up the business profile, check Braintree’s compatibility list. This will explain merchant and customer requirements, fees, and testing options. It also provides a replica of the integration before going live. Following initial setup, the control panel will give you access to Braintree and Venmo.

When people ask if Venmo is safe for sellers, they really want to know if their account details and sensitive information are secure and protected. They may also want to understand Venmo’s chargeback process in the unfortunate case of theft or fraud.

Venmo Purchase Protection can help prevent financial losses that arise from unauthorized transactions. It also protects you, the seller, if buyers claim they didn’t receive a product.

Venmo also offers buyer protection. However, buyer protection only covers tangible goods and services; it does not cover digital or intangible items. The maximum protection amount is $2,500 and does not apply to transactions made with credit cards.

Buyer protection eligibility requirements include the following stipulations:

How Secure Is Venmo for Business Owners?

Exactly how does Venmo keep its users safe? Let’s examine this platform’s security measures for combatting cyber threats, fraud, and theft.

Over the years, Venmo has implemented several security measures to guarantee secure user transactions. Some of these measures include:

1. User Verification Through Phone Number and Email

Users must verify their phone number and email address when creating an account. You cannot create a Venmo account without completing this step.

2. Biometric Authentication

Biometric authentication extends to security measures such as fingerprint or face recognition. However, this form of authentication is only available on supported mobile devices.

3. Encrypted Data Transmission

Venmo uses encryption to identify unauthorized transactions and protect sensitive account information. The platform stores encrypted data on servers in secure locations. You will notice ‘https://’ and a lock icon in your web browser address bar, indicating encryption is in use.

4. Two-Factor Authentication (2FA)

Two-factor authentication offers an added layer of security to prevent anyone from signing into your account. In this instance, two-factor authentication can mean using a PIN to sign in, biometric verification unlocked using fingerprint recognition technology, or having a unique sign-in code sent directly to the number associated with your Venmo account.

Venmo will never ask you to divulge a security code or password through a phone call, text message, email, or chat. Similarly, Venmo will not ask you to send money via another payment platform. When someone requests your six-digit code, it’s likely fraudulent.

Venmo is not necessarily safe for sellers who don’t upgrade to a business profile. As a peer-to-peer (P2P) payment platform, Venmo is not only inherently risky for business transactions but also technically against its terms and conditions. In other words, Venmo prohibits standard account users from accepting payment for goods or services.

Here are some other reasons you should not use a standard Venmo account for business transactions:

• Privacy concerns
• Inadequate protection from fraudulent transactions
• Lack of records or official documentation for tax purposes
• No monthly reports detailing income or expenses

You must use Venmo for Business to accept payments for goods or services. While there is technically a transaction fee, the features and added protection are well worth it. The user receives protection benefits, formal tax documentation, and access to bookkeeping tools.

While merchants want to know if Venmo is safe for obvious reasons, it is also imperative that a merchant’s clients feel safe using the platform. After all, if clients don’t feel safe paying for your services, they may avoid doing business with you altogether.

By verifying your business account, you buy into an authentic sense of consumer trust. Since Venmo only offers consumer protection for transactions made with verified businesses, consumers will be less likely to trust unverified providers.

Risks and Limitations of Venmo

While we recommend business account verification to build trust with your customer base, it is also true that it increases your risk margin.

Verification generally requires personal information, including addresses, birthdates, Social Security numbers, passports, and other sensitive details. The delicate nature of this information increases the risk of identity fraud or theft should there be a data breach.

However, the maximum amount a business can transfer with Venmo differs based on verification. Unverified businesses face a payment cap of $2,499 per week and a bank transfer limit of $999. Verified businesses have higher limits—payments up to $24,999 weekly and bank transfers up to $49,999.

Another limitation of Venmo for Business is that it does not integrate with other tools required for daily business operations. Being unable to manage scheduling, marketing, and payments collectively makes identifying patterns in your daily work far more challenging. Switching between the tools and applications is also tedious, time-consuming, and frustrating.

Venmo Scams to Understand

Apps like Venmo are susceptible to three to four times more fraud than credit cards, making them unsafe for sellers or buyers.^[1]New York Times. “When Your Last $166 Vanishes: ‘Fast Fraud’ Surges on Payment Apps” Accessed June 12, 2023.

Venmo scams typically deceive users into providing fraudsters with money or personal data, such as bank account details or Social Security numbers. Although users are generally safe if they follow security protocols, they nevertheless remain attractive targets for scammers for two reasons.

First, Venmo payments are almost instantaneous. However, they also remain unverified for several days. This lapse allows scammers to use stolen card or bank account information without immediate bank detection.

Second, Venmo only requires a phone number and basic information for a user to create a personal account. This may permit scammers to masquerade as genuine users and initiate fraudulent transactions.

How To Stay Safe When Using Venmo

In our increasingly digital world, more businesses are turning to providers like Venmo to make transactions convenient for their clients. However, this sense of expedience could threaten your business’s financial security. Here are eight tips every business owner should follow to prevent falling prey to scammers and other malicious actors.

When someone tries to hack your account, your password is the first method they will use to try and gain access. Therefore, you must create a password that is difficult, if not impossible, for hackers to crack. A strong password includes a mix of upper and lowercase characters, numbers, and unique punctuation symbols.

Venmo users are strongly encouraged to refrain from using personal details to create passwords. These details include key information such as a user’s name, birthday, or SSN (basically, anything that can potentially give away their identity). Users are also encouraged to make sure that every one of their online accounts has its own unique password.

To succeed in today’s interconnected business world, you must stay informed about potential cybersecurity threats and take whatever proactive measures are necessary to protect your business. If you rely on mobile or digital payments for client transactions, you must ensure that no one can access your account without authorization.

Unauthorized access to your financial information occurs when hackers obtain stolen login credentials via unsuspecting devices and proceed to access software without permission. To take protective measures, start by monitoring which devices have authenticated permission. Next, remove any unauthorized devices (if applicable) from your Venmo account. This should help to prevent security breaches.

While you may feel your business account is safer than a simple peer-to-peer account, it’s important to remain watchful and only send money to those you trust. When initiating a business-to-business payment, feel free to contact the other party to solicit their validity and confirm that it is indeed a verified business account.

Remember, whether you have a personal or business account, you can still be a target for scammers.

Remain aware of scam tactics, as well as new scams that surface. A stranger or unverified third party requesting payment or account access should always trigger a red flag.

True to its name, two-factor authentication requires a second verification before granting account access. The second verification most commonly arrives as a code sent to your phone or email. Users actively protect themselves by enabling two-factor authentication, even in the unfortunate situation that their password becomes compromised. Enabling two-factor authentication on all accounts, not just Venmo, is essential for optimal security.

Whether it’s a business or personal account, we don’t recommend you attach a debit card to your Venmo account. If someone obtains access to your Venmo account, they also obtain access to your debit card details, making it all too easy for them to drain your account.

Instead, use a credit card. Credit cards offer superior fraud protection because, unlike debit cards, they are not linked to your bank account.

Venmo allows you to set up email or text notifications for any transactions taking place on your account. This includes payments made, payments received, and login alerts. By closely monitoring transactions, you can identify suspicious activity and take swift and decisive action.

Lastly, you should also closely monitor your credit report. Unprecedented or aggressive fluctuations in your credit report could indicate something is wrong. Monitoring your credit report can help detect fraudulent activity on authorized accounts, thus allowing you to take action before any lasting damage occurs.

Is Venmo Safe for Sellers? Our Final Thoughts

As a business owner, you must find a perfect balance between convenience and security. Although Venmo has become increasingly popular for peer-to-peer transactions, there are also understandable concerns from the seller’s point of view.

Venmo for Business’ one-size-fits-all model means merchants wind up with services that aren’t necessarily tailored to their business needs. Among these services is security. We’ve explored the limitations of Venmo’s security system. Still, Venmo for Business remains a fairly basic offering that demands much vigilance from its users. If you’re a high-risk business, you may be better off looking for a more dynamic system from the get-go.

Enter PaymentCloud. At PaymentCloud, we do our homework to find a range of payment processor options that make sense for your business needs. If security is a top priority for your company (and it should be), we’ll track down the perfect solution for you. We offer business owners a simple yet robust online payment solution with sky-high security features and low processing fees. Reach out today—let’s find the payment system that is just right for you.

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