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 as a target of scams and fraudulent transactions. And with businesses increasingly relying on mobile payments, today’s merchants need an understanding of the safety features, as well as the potential risks, of mobile payment solutions.

Venmo was originally designed to simplify money transfers and works especially well for exchanging money between relatives and friends. In 2021, Venmo started offering business profiles with additional features, enabling business owners to receive payments for goods and services. But accompanying this increased convenience is increased risk.

With cyber threats now looming in every digital payment space, you need to be aware of the security options available to protect your hard-earned money. Let’s explore Venmo’s safety features sellers should know about to ensure their financial transactions stay safe while using its payment platform.

How Does Venmo Work and Is It Safe for Merchants?

Venmo is a mobile banking application that facilitates money transfers between peers and, more recently, 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 keep transactions private.

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 then just click on the ‘PayPal Checkout’ option, at which point they can select to pay with their Venmo account. After payment, customers receive an automated Venmo-branded receipt.

If you do not have a PayPal account, you will need to set up Venmo for Business payment integration. The process is more complicated since you first need to get Braintree. Braintree—also a PayPal brand—is essentially the engine that processes 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. After setup, the control panel will give you access to Braintree and Venmo.

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

Venmo Purchase Protection can help prevent financial losses due to unauthorized transactions. It also protects you if buyers claim they don’t receive a product purchased from you. (Your transaction fees go toward this service.)

Venmo offers buyer protection as well. Buyer protection only covers tangible goods and services, not digital or intangible items. The maximum protection amount is $2,500 and does not apply to any transactions made with credit cards.

Buyer protection eligibility requirements include:

• The transaction must take place within the Venmo app
• The buyer must purchase from a verified seller
• The purchase was made with either the balance in the buyer’s Venmo account, a debit card, or a linked bank account
• The buyer first needs to try and settle the dispute with the seller directly

How Secure Is Venmo for Business Owners?

Exactly how does Venmo ensure seller safety on its platform? Let’s look at the platform’s safety measures to combat cyber threats, fraud, and theft.

Venmo’s Security Measures: Past Changes

Over the years, Venmo has implemented several security measures to ensure safe and secure transactions for its users. Some of these measures include:

1. User Verification Through Phone Number and Email

This necessitates that users verify their phone number and email address when creating an account. You cannot create an account without completing this step.

2. Biometric Authentication

This includes measures such as fingerprint or face recognition on mobile devices. It is, however, only available on devices supporting this feature.

3. Encrypted Data Transmission

Venmo uses encryption to identify unauthorized transactions and protect 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 additional layer of security to prevent anyone else from signing into your account or processing payments from your account. This can entail using a PIN to sign in, biometric verification such as your fingerprint, or receiving a unique sign-in code 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. Nor will Venmo ask you to send money via another payment platform. When someone requests your six-digit code, it’s likely fraudulent.

Is Venmo Safe for Sellers Today?

Venmo is not safe for sellers if you don’t upgrade to a business profile. As a peer-to-peer (P2P) payment platform, Venmo is not only risky for business transactions, but also against its terms and conditions. Venmo explicitly prohibits standard account users from accepting payment for goods or services on its platform.

Other reasons you should not use a standard Venmo account for your business transactions (besides the fact that it’s not allowed) include:

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

When using Venmo to accept payments for goods or services, you have to use Venmo for Business. Although there is a transaction fee, the additional features and added protection are well worth it. Not only do you get added protection benefits, but you also get formal tax documentation and access to bookkeeping tools.

How Safe is Venmo for Your Customers?

Business owners may ask if Venmo is safe for sellers, but there’s also a question of the app’s safety for its users. While you want to ensure your payment provider is secure for you, as a merchant, it’s also essential you ensure your clients feel safe using the mobile payment solution. After all, if clients don’t feel safe paying for your business, they will avoid doing business with you altogether.

By verifying your business account, you will increase consumer trust. Since Venmo only offers consumer protection for transactions made with verified businesses, consumers are less likely to trust unverified providers.

Risks and Limitations of Venmo

While we just recommended business account verification as a means of fostering trust with your customers, it does put your information at greater risk.

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

However, the maximum amount a business can transfer with Venmo also 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.

A further limitation of Venmo for Business is that it does not integrate with other tools required for daily business operations. Not being able to manage scheduling, marketing, and payments together makes it harder to identify patterns in your daily work. It’s also tedious, time-consuming, and frustrating to toggle between the tools and applications.

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 accounts or Social Security numbers. Although users are generally fine if they follow safety protocols, they remain attractive targets for scammers for two reasons.

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

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

How To Stay Safe When Using Venmo

In our digitally-driven world, more businesses are turning to providers like Venmo to make transactions convenient for their clients. However, this convenience can pose risks to your business’s financial security. Here are eight tips every business owner should follow to guard against falling prey to scammers and other malicious actors.

1. Build the Most Secure Password You Can

When someone tries to hack your account, your password is the first entry point. It is, therefore, essential that you create a password that is hard to decipher. A strong password consists of a mix of upper and lowercase characters, numbers, and special punctuation symbols.

Additionally, do not use information such as your name, birth date, or SSN that will give away your identity. Also, be sure to ensure each of your online accounts has a completely unique password.

2. Know Which Devices Are Accessing Your Account

To succeed in today’s interconnected business world, you need to stay informed about potential cybersecurity threats and take proactive measures to protect your business. If you rely on mobile or digital payments for client transactions, ensure unauthorized access to your financial information does not occur.

Unauthorized access to your financial information can happen through hackers obtaining stolen login credentials via unsuspecting devices and accessing software without permission. To guard against this situation, start by monitoring which devices have authenticated permission. Next, remove any unauthorized devices (if applicable) from your Venmo account. This should prevent security breaches from unauthorized access.

3. Don’t Send Money to Strangers

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 making a business-to-business payment, contact the other party to solicit their validity and ensure it is a verified business account.

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

4. Keep On Top of the Latest Scammer Strategies

Remain aware of scam tactics and new scams that surface. It should almost always trigger red flags when anyone out of the ordinary requests a payment or account access.

5. Turn On Two-Factor Authentication and PIN Features for Extra Security

Two-factor authentication requires a second verification before granting account access. The second verification most commonly comes in the form of a code sent to your phone or email. By enabling two-factor authentication, you are still protected even if your password is compromised. And for maximum security, it’s important to enable two-factor authentication on all accounts—not just Venmo.

6. Watch Your Debit Card Usage—Credit Is Safer

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 and gains your debit card details, they can drain your bank account.

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

7. Set Text and Email Alerts

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 action quickly.

8. Watch Your Credit Report For Fluctuations

Lastly, you should also closely monitor your credit report, as it contains information about your past financial dealings. Keeping an eye on your credit report can help you uncover fraudulent activity or authorized accounts. This allows you to take action before any lasting damage occurs.

Is Venmo Secure for Businesses? Our Final Thoughts

As a business owner, you must find a perfect balance between payment convenience and payment security. Although Venmo has become increasingly popular for peer-to-peer transactions, sellers have concerns.

Venmo for Business’ one-size-fits-all model means that merchants wind up with services that aren’t necessarily tailored to their specific business needs—among these services is security. We’ve elaborated on the various limitations of Venmo’s security system, but it comes down to the fact that it’s a fairly basic offering, thus demanding a great deal of vigilance on users’ parts. That may cut it for some low- and mid-risk businesses—but do you really want to take the chance? And if you’re a high-risk business, you may be better off looking for a more robust 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 top of mind 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 just right for you.