DETROIT - It's not uncommon to hear a 20-something tell another 20-something to "Venmo" it.
You might hear a roommate say, "Hey, can you Venmo me rent?"
Venmo is a mobile payment service that has established itself as the go-to money transferring service for Millennials. If you're interested in the full origin story, check this out.
The service was rolled out in 2009, and in 2014, it processed $700 million in payments between individuals. In fact, users can't use Venmo to purchase anything online -- with the exception of event tickets through a new partnership.
The company announced Feb. 16 that over $1 billion payments were made on the app in January.
Several companies, -- including Square, PopMoney and Simple -- are trying to capitalize on the need for person-to-person transactions. Why are so many flocking to Venmo?
"Venmo has essentially eliminated the use of checks for our generation," said recent Michigan State University graduate Nick Bognar. "Having the ability to immediately pay a friend at dinner or split a bill with roommates over the phone is extremely convenient."
Bognar, 25, said the social aspect of Venmo is a huge selling point.
"I also enjoy the network effect they have created. Venmo has a live feed similar to your Facebook timeline, and I can quickly see my friends paying each other," Bognar said.
Another advantage is the security of the app.
"We encrypt your sensitive financial information, including your bank account details. That data is never stored on your device. It’s not even visible to you," a Venmo spokesperson said. "So, even if your crazy uncle got your password and logged into your account without you knowing, your bank account information is not visible."
The app is also password protected, and asks for a pass code every time a user opens it.
It's also somewhat of a contest to see who can come up with the most witty, creative -- and sometimes outlandish reasons for paying a friend.
Bognar, for instance, has written things like, "You're not my real dad," and "Leave my family out of this" as reasons for a routine Venmo payment.
Of course, not everyone loves Venmo. Gizmodo's Adam Clark Estes says he thought Venmo was a great idea -- but thinks it has many flaws. One includes, as he calls it, "holding your money hostage."
"Venmo lets you send and request money, but only if you deposit and withdrawal those funds through your Venmo balance. Want to pay your friend Mario for that slice of pizza he bought you? Super, just deposit that $2 in your Venmo account and then Venmo will move it to Mario’s Venmo balance," Estes writes.
"When Mario’s ready to put that $2 in his actual bank account, he’ll have to transfer it out of Venmo and wait a day or two for the money to snake its way to the bank. All the while, Venmo itself is essentially holding your money hostage."
Venmo makes its money on fees. Many of the services don't incur transaction fees, but it does charge a 3 percent fee for payments by credit card.
It remains to be seen if Venmo can exist as a viable money maker by itself. The company is now a part of Paypal; a global leader in online money transfers.
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