TCB in the Community

How “Pay Someone” Compares to Venmo

posted on July 16, 2019 in Financial

In the age of instant, peer-to-peer (P2P) payments have become the norm for bill splitting, dog sitting, movie-watching, and every other emoji-fiable activity. Unsurprisingly, mobile P2P payments are the fastest-growing sector in the P2P industry. The ability to quickly send and receive money from your phone is keeping people honest, reducing awkwardness, and making the IOU obsolete. That said, there are some downsides with the more popular platforms.  

Texas Citizens Bank (TCB) has a secure, bank-backed alternative for you: Pay Someone. No need to download yet another app, this P2P feature is built into TCB Online Banking. So, you can easily access it whenever you want using app or browser.

Here’s how we stack up against Venmo:

Privacy

Venmo quickly became a verb among millennials (“Just Venmo me”). The social, emoji-centric approach to paying friends is what set the P2P service apart from similar apps. But does Venmo sacrifice too much user privacy for the sake of playfulness?

The Federal Trade Commission (FTC) thought so.

Last year, PayPal (yes, PayPal owns Venmo) settled with the FTC over allegations that Venmo “misled consumers about the extent to which they could keep their transactions private.”

Aside from the actual amount, Venmo transactions are public by default. Unless you go to the extra effort to turn this off, everyone can see who you paid and for what (the note or emojis you published along with your payment).

This may sound insignificant, but hackers routinely use this kind of information to socially engineer scamming campaigns. They’re already extracting info from your social profiles and analyzing your buying and browsing habits, your Venmo payments give them extra insight into your hobbies, friends, and finances. It’s not just words that can hurt you, it’s your emojis and friends as well. What’s stopping me from creating a fake profile of a friend you pay frequently? By making your paper trail public, apps like Venmo can put you at risk.

TCB’s Pay Someone leaves the newsfeed to Facebook. The only person notified of your transaction is the person you paid. You have the option to send them a text or email to let them know a transfer’s coming. Like a standard check, you can leave a memo or not. It’s up to you. What’s important is your info stays between you and the payee.

Security

Acquired by PayPal in 2013, Venmo is not so different from its parent company. It’s not a bank; it’s a third-party service. As such, it’s forced to create unnecessary steps, workarounds. Instead of transferring from bank to bank or debit to debit, Venmo transfers money from your bank account (or card) to your Venmo account, to your friend’s Venmo account.

A little clunky, but Venmo does have some security. According to Venmo’s site, Venmo uses encryption software to protect user account data. They also store data on secure servers, allow users to remotely disable their Venmo app if their phone is stolen, and provide the option to set up a PIN for multifactor authentication.

Like Venmo, Pay Someone leverages Electronic Funds Transfer (EFT) to send money using your debit card. On the receiving end, it depends on how the payee chooses to accept the money. If they want it on their debit card, the transfer happens instantly through the debit card network. If they want it deposited directly to their bank account, it becomes an Automated Clearing House (ACH) payment, which can take up to four days.

Unlike Venmo, there is no limbo, intermediary account. The money is either in your friend’s possession or on its way. Additionally, because Pay Someone is within your Online Banking account, your credentials are bank authenticated. No need to create a new login and password.

Accessibility

Once funds are transferred to your friend’s Venmo account, your friend can either keep a balance in their Venmo account, pay a fee for an instant debit transfer, or select the slower (but free) bank transfer. In the meantime, your money stays in Venmo’s uninsured, non-interest-bearing account.

Acting FTC Chairman Maureen K. Ohlhausen didn’t think Venmo was transparent enough about that process. “Consumers suffered real harm when Venmo did not live up to the promises it made to users about the availability of their money,” said Ohlhausen.

With Pay Someone, the process is more direct. More peer-to-peer, less peer-to-company-to-peer. Once notified of your money transfer, your friend chooses how they want to access it.

Fees

These have changed several times over the years; however, Venmo currently only charges users a 2.9% fee for credit transfers. Essentially, this is Venmo pushing the credit card company’s fee onto the consumer.  

While that fee is waived for debit cards, the Fintech company recoups by charging 25 cents for instant transfers to debit. You can get around the fee by using your Venmo balance, but that money is not FDIC insured. You can also avoid the fee by linking a bank account or debit card. The only worry there is if there’s a data breach. In other words, paying credit will cost you a fee; paying from your account opens you up to greater risk if Venmo is ever hacked.

Lastly, money collected is deposited into your Venmo account, not your bank account. Again, Venmo is not a bank. It’s not insured by the government. To instantly move it over to an insured account, you will need to pay a 1% fee ($0.25 minimum, $10 maximum). A one- to three-day standard transfer is free of charge, but that’s about the same turnaround as a check.

In contrast, our Pay Someone solutions charge no fees. It’s just as free to receive a direct transfer (EFT) to your debit card as it is to receive a slower transfer (ACH) to your bank account.

Ease of Use

Sender Experience

Pay Someone App - Mobile

Mobile interface for the sender in TCB’s Pay Someone (within the TCB Online Banking app)

Like Zelle, another popular P2P payment app owned by seven major banks, Pay Someone comes integrated within your existing Online Banking environment. That means no new enrollment, account, password, or profile. Ask yourself: would setting up a new, less secure financial account “spark joy”? If the answer is no, try Pay Someone.  

Here’s how easy it is to get started: Log in (through our website or mobile app), hit “More” in the top menu, then select “Pay Someone.” From there, you can add people you want (or need to) pay using their phone numbers or email addresses.

Receiver Experience

Mobile interface for the receiver in TCB’s Pay Someone (within the TCB Online Banking app)

As the receiver, your paying friend decides how you’re alerted. You will either get a text or email notifying you of the incoming payment. From there, you’ll click a link and add your debit or bank info, depending on how you’d like to receive the funds.

As a Pay Someone recipient, your mobile (or desktop) screen will look something like this:

The best part? You don’t need a Texas Citizens Bank account to receive money using this service. Essentially, we’re on a mission to make P2P payments as easy as possible for both parties.

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