Texting cash available from VenmoPay 555-555-1234 $13.70 for dinner. It seems simple; sending money to a friend or business with your phone, but after years of trying, the practice never really caught on in the U.S. Past attempts at sending money with a cell phone have been simple enough to use, but the fees involved often outweighed the convenience of texting a payment. This problem is one that Venmo, a new mobile payment service, hopes to avoid in order to grow as a cash replacement.

"We allow people to make cash transactions without the hassle of carrying cash", says Jameel Farruk of Venmo in a phone interview with WalletPop. It's the lack of fees that Venmo believes will allow it to become popular not only with individuals who need to pay a friend, but also with businesses who could set up a Venmo account to let customers pay for a coffee or other goods and services.
Currently, it is free to add money to your Venmo account, send money, receive money and even withdraw money to your bank account. There is no minimum to load on your account, send and receive money or to withdraw to your bank account. In the future, Venmo plans to make money by charging users a fee for an expedited transfer to your bank account, which currently takes about the same amount of time as a standard bank transfer.

There are three basic functions of Venmo; Pay, Charge and Trust.
  • You can pay any number or Venmo user by texting "Pay (telephone number) $18.40 for dinner".
  • You can charge another user for their share of something by texting, "Charge JoshSmith $5 for lunch".
  • You can trust a Venmo user by texting, "Trust JoshSmith" to autopay any charges from that user.
The "trust" feature makes it easy to autopay roommates or others for shared, recurring expenses or for a restaurant to charge patrons with a type of house account. There are some built-in safeguards to the trust function, such as the ability to reverse a trusted charge for 24 hours and a maximum transaction of $500. Soon, Venmo will also offer the ability to lock your account if your phone is lost,or to hold transactions while you are unavailable for extended periods so that your account isn't abused.

Venmo is straightforward to use and thanks to the fee-free environment, I feel that it has a real shot at providing a peer-to-peer cash replacement as more people become comfortable with mobile payments and m-commerce. It's pretty close to the future of money that Wired Magazine imagines and many of the other cell phone payment services, but thanks to no fees and the universal nature of the service, it is a one of the best solutions yet.

Venmo is in beta but you can request an invite and join rather quickly. If you send a payment to a number that is not already a Venmo member, they will be prompted to sign up.

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