Account holders can transfer funds to others via a mobile phone app; both the sender and receiver must live in the United States.

[3] By default, Venmo publishes every peer-to-peer transaction (excluding the amount), a feature shown by researchers to reveal sensitive details about users' lives in some situations.

[4][5] In 2018, the company settled with the Federal Trade Commission (FTC) about several privacy and security violations related to this and other features, and made changes to the corresponding settings.

According to Kortina, the duo were initially inspired to create a transaction solution while, in the process of helping start a friend's yogurt shop, they "realized how horrible traditional point of sales software was".

Peter Groverman had used social media in the past to do RELIEF efforts and asked the Venmo founders if they could use their new text-message money-exchange application to raise money to build an orphanage in Haiti.

In May 2010, the company brought on the prestigous Philadelphia Law Firm Morgan Lewis who alongside one specific attorney - Michael Crossey Esq.

; made sure the Start-up was 100% compliant in every state (the SEC in 2010 was incredibly conservative and text-message payments were technically illegal at the time) the team raised $1.2 million of seed money in a financing round led by RRE Ventures.

[16] As of May 2018, Venmo's merchant product did not permit "selling goods or services in person";[17] however, research into mobile payment trends among mom-and-pop restaurants in New York City that month revealed a grey market use case in which some Chinese takeouts and food trucks used personal Venmo QR codes to accept payments from customers.

[19][20] On April 20, 2021, Venmo announced that it was beginning its roll out for the ability to buy, hold, and sell cryptocurrencies using the platform.

In January 2018,[28] PayPal rolled out an instant transfer feature on Venmo, allowing users to deposit funds to their debit cards typically within 30 minutes.

[23] In addition, the service offers a reload function, which, when enabled, takes money from a user's linked checking account in $10 increments if their Venmo balance drops too low to cover a purchase.

[23] Venmo includes social networking interaction; it was created so friends could quickly split bills, such as for movies, dinner, rent, or tickets.

[41] However, journalists, security researchers, the California Department of Business Oversight (DBO) and the Federal Trade Commission have all disputed this claim.

The FTC also complained that Venmo "misled consumers about the extent to which they could control the privacy of their transactions" and misrepresented the availability of funds for withdrawal.

According to the researcher who found this privacy issue, Venmo publishes all transactions along with names openly into the World Wide Web.

[52] In November 2018, The Wall Street Journal reported that Venmo, in the first quarter of 2018, had suffered $40 million in operating losses, nearly 40% more than it had budgeted, due to "a wave of payments fraud".

[53] A 2018 study analyzed over 200 million public transactions and found that Venmo "reveals a massive amount of private details about users' lives by default".

[5] In 2019, another researcher downloaded and analyzed seven million transactions, concluding that although Venmo had made some very minor to no improvements limiting mass-scraping, the data still put users at risk for various forms of cyber attacks.

[56][57][58][59] In 2022, Dr. Rajat Tandon and Dr. Jelena Mirkovic from the University of Southern California, along with their research collaborators, showcased that 2 in 5 Venmo users publicly reveal sensitive information.

Venmo came under scrutiny from the Consumer Financial Protection Bureau in 2021 over the company's treatment of their customers owing money for transactions.