In case you don’t already know this, you have to have a U.S. phone number and be physically located in the U.S. in order to actually use Venmo. This can be extremely limiting for anyone who travels regularly, works and/or lives in a border city, or for U.S. military personnel who might be stationed overseas. Another big factor to consider has to do with storing money in your Venmo account. Unlike traditional checking or savings accounts which can have varying annual percentage yield (APY) rates, Venmo accounts do not accrue any interest while your money is parked there. Similarly, since Venmo accounts are not bank accounts, they are not Federal Deposit Insurance Corporation (FDIC) insured. This means that if Venmo folds as a company, they would not be obligated to return your account balance to you.
Venmo also imposes limitations on its transfers to and from bank accounts. For instance, customers (who’ve completed an identity confirmation process) are able to transfer up to $19,999.99 per week to their bank account. However, the per-transfer limit is only $5,000, meaning you’d need to make multiple transfers to reach that maximum amount. Venmo also states that these transfers can take anywhere from one to three business days for standard transfers. With that in mind, Venmo does offer an Instant Bank Transfer option which can allow your funds to be available from qualified banks within 30 minutes, but it incurs a 1.75% fee on the transfer amount.