Reasons Not to Fear Mobile Money

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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.

This article is from the archive of our partner The Wire.

About the Author

Adam Clark Estes is a former writer for The Wire. He has also written for The Huffington Post and Vice.

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When the FBI discovered a network of Bosnian-Americans giving support to terrorists, they also discovered Abdullah Ramo Pazara, a U.S. citizen and a battalion commander in Syria.

Abdullah Ramo Pazara had a craving for packets of instant hot cocoa. The Bosnian-American former truck driver was, at the time, a commander of an Islamic State tank battalion in Syria. Apparently, even foreign fighters who reject their former lives in Western countries for a chance at martyrdom for ISIS sometimes long for the creature comforts of their previous homes.

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In 2013, six Bosnian immigrants in the United States allegedly sent money, riflescopes, knives, military equipment, and other supplies to jihadists in Syria and Iraq through intermediaries in Bosnia and Turkey. According to the U.S. government’s allegations, individual ISIS fighters would make specific requests—mostly for money and military equipment—and the group would then raise funds and send supplies to Syria. The requests included what was surely an unexpected revelation of nostalgia—packets of Swiss Miss hot cocoa. By sending the cocoa mix and other supplies, federal prosecutors argue, these U.S.-based Bosnians provided what is known as “material support” to terrorists, in violation of the Patriot Act.