21 May I prefer writing checks but everyone uses Venmo. Should I?

Q. I prefer writing checks and I don’t pay bills online, but lately, it seems like everyone is using Venmo. So giving gifts, for example, I would usually use a check but now I’m wondering if I should look into Venmo. I’m just not comfortable with someone having my banking information. Should I be worried?
— Old school

A. Payment apps like Venmo are very popular.

Since Venmo’s inception in 2009, the number of Venmo users grew to 80 million in 2022 and $244 billion in payments were made.

Let’s cover some history here.

Venmo enables users to transfer funds to friends and in payment for business services using an app on their phone, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

In 2013, Venmo was purchased by Paypal which was one of the first electronic payment systems available to consumers and businesses, she said. It uses encryption technology to store the personal and financial information of its users. In addition, there are options to create a PIN or face-id authentication to further secure the account, she said.

The U.S. Patriot Act requires that users go through an identity verification process as well, Mott said.

She also noted some statistics. While 57% of Venmo’s users fall between ages 18 and 29, almost 34% are age 50 and over.

“Convenience is one of the primary reasons driving the popularity of tools like Venmo. It’s estimated that 60% of Gen-Zs don’t have a checkbook and only 38% of Millennials write checks,” she said. “These segments of the population prefer to rely on their smartphones for banking and personal financial transactions.”

Mott said the use of Venmo is widespread and the company is always updating its security technology in an effort to forestall data breaches.

But, she warns, consumers must always be on guard for scammers and fraud regardless of whether it’s a tool like Venmo or a call from the IRS.

“The IRS will never call you!” she said. “Being vigilant by having strong passwords, facial id or two-factor identification will help minimize issues.”

Mott said another electronic payment system that was created in 2017 which you might consider is Zelle. More than 2,000 banks and credit unions participate in the Zelle system.

“This tool allows electronic payments to be sent directly from a bank account or the phone app to an end user who is also signed up to accept Zelle,” she said. “Unlike Venmo, there is no need to set up a separate user ID and password when using Zelle through your online bank account.”

But Zelle users, too, are often the victim of scams. We’re not talking about someone breaking into your account, but instead, tricking you to transfer money to someone who is impersonating a government agency, business or even a third party who says they’re helping one of your loved ones who is in the hospital or in jail. They’re all a scam.

Mott said when it comes to writing checks and sending them in the mail, it’s important to recognize the growing risk that it never makes it to the intended destination.

In 2023, the U.S. Postal Service cautioned consumers to use secure postal boxes or drop off envelopes with checks directly at a postal location to help minimize the possibility of theft. The same applies to mailing gift cards, she said. And according to the Los Angeles Times, banks issued approximately 680,000 reports of check fraud in 2022, up from 350,000 in 2021.

“The issue of mail theft certainly contributes to the growing use of electronic bill pay by consumers,” Mott said.

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This story was originally published in May 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.