Reasons Not to Fear Mobile Money

Venmo, the little mobile payment startup that wants to take on PayPal, is now open to the public and eager to process some payments. But does that mean it's time to pay rent with your iPhone?

Venmo, the little mobile payment startup that wants to take on PayPal, is now open to the public and eager to process some payments. But does that mean it's time to pay rent with your iPhone? It's surprisingly simple to make payments:

• Step 1: Sign-up for Venmo and download the app. 
• Step 2: Go to "Settings" > "Credit Cards" to connect your Venmo account to a credit or debit card.
• Step 3: Tap "Pay" to text the payment. 

But paying for things with your phone is weird and intimidating. (It must be like the early days of credit cards, when a merchant would make a carbon copy of your card and promise only to take out as much as you allowed.) Just imagine your roommate's reaction when instead of getting a check for your portion of the rent, she gets a text saying that you've sent the funds to her Venmo account. It's not intuitive -- partly because it's so new -- but it does work. Here's the 1-2-3 for receiving funds via Venmo:

• Step 1: Sign-up for Venmo and download the app. 
• Step 2: Tap "Charge" to text a charge to whoever owes you money.
• Step 3: Tap "Cash Out" after you receive the money to connect your Venmo account to your bank account and follow the steps to transfer the funds.

Still not convinced? Let's address some of the common reasons for hesitation:

The Internet is not a safe place. This is a true fact. However, there are some signs to let you know that any given service is taking the appropriate security measures. Venmo is VeriSign Secured and uses something called 256bit Secure Socket Layer. It's also protected by the FDIC thanks to its relationship with Wells Fargo. When you send or receive money on Venmo, it's actually put into a custodial account with Wells Fargo. Anything that happens along with way gets the same sort of protection you'd get from sending a check in the mail, and Venmo hopes to set itself apart by offering good personal customer service. As a point of comparison, PayPal offers a suite of security reassurances, but the process to make claims is much more complex than Venmo's "Email Us" approach.

There must be hidden fees. There are. Bank payments are free, but Venmo limits transfers to $2,000 a week. After you've made $500 in credit card payments, Venmo charges a 3 percent fee for each credit card payment. (This is roughly on par with PayPal's 2.9 percent fee, though there are other fees if you're paying abroad.) The service was originally designed for small payments so if you're using Venmo to split a dinner check every once in a while you probably won't hit the limit. If you charge the wrong person, Venmo will send the money back to you.

This doesn't seem to be catching on, so it must be a scam. It's actually not. Venmo's been in beta for two years, and they say they're processing about $10 million worth of transactions every month. Unlike PayPal and Square, Venmo is simply about friends paying friends for now. If you and your friends don't like to talk about money or deal with money, whether it be after a nice meal or when rent is due, Venmo let's it all happen virtually. After all, human's are good at many things and losing money is one of them.