Venmo requires a U.S. phone number, and for users to reside in the U.S. in order to use the app. This can have serious implications for anyone who frequently travels, lives in a border city, or has international friends and family. Not to mention, the physical residence requirement can be difficult for federal employees and/or military members and their families who might be stationed overseas.
As with all P2P financial apps, note that any money you hold in your Venmo account isn’t FDIC-insured, meaning if the company folded tomorrow you wouldn’t be guaranteed your money back. Protections only exist for funds that hit your account via direct deposit or through a remote check but not funds sent by other Venmo users.
Venmo also charges a host of different fees for various functions within the app. While standard transfers are free between bank accounts, Venmo debit cards, or Venmo balances, there are fees for other kinds of transfers. Notably, a transfer using a credit card will incur a 3% fee. Also important is the fact that traditional (free) Venmo transfers can take anywhere from three to five business days.
Venmo does offer an Instant Transfer option which promises your money will hit your account in 30 minutes, but this function incurs a 1.75% fee on the total amount being transferred. Venmo also charges a scaled fee for buying or selling cryptocurrencies through the app, as well as additional fees for transferring cryptocurrency out of your Venmo or Paypal account.