You've moved to the United States and you've worked out how to set up your Social Security Number and your bank account, you've worked out tipping, and you even have an apartment… But people keep asking if they can “Venmo you” money. What is Venmo and why is transferring money so difficult?
The biggest surprise when I moved to New York and the United States was the fact that some things I took for granted had completely disappeared. Sure, there's gigabit internet throughout the city, and WiFi in every park, but banking was one area where it felt like I had been transported back into the Middle Ages.
Cheques Checks exist, for starters. If you want to pay your accountant, or to the State, there is no quick method of online payment at the bottom of an invoice, only an address for check postage. You then probably have to wander off to the bank and have them prepare a few checks for you and Google “how to write a check” (ok, maybe that was just me).
But for transferring money between friends, surely this isn't the way!? Don't worry, it's not.
Venmo for online money transfers quickly and easily
Venmo is a PayPal service that was created to fix this issue when you want to transfer money between friends and is basically a standard for living in the States.
For iOS users: You will first need to change your phone to be in a US region (which requires US banking details – click here for help), however, it’s quite easy.
Once you install and set up the app, you will see what is effectively a mini social media for transferring money to friends. You each have a username (I'm @AmericaJosh in case you feel like testing the “Send Money” function), and you can send or request money to and from each other.
You connect up your bank account, it pulls money directly from it, and sends it to your friend. You maintain a balance inside Venmo for this purpose and then can move the money back to your bank if you want to pull it out as cash.
Cash App is a Venmo Alternative
The Cash App works very similarly to Venmo in all ways but it's worth having both in case you come across someone with a particular preference.
So it works just like Venmo and comes with a card option so you can actually spend the money from your balance in a store, and you can also use the card at an ATM! Again, you have a username, but with this one there are less social media and more just sharing money (I'm $AmericaJosh on here, too).
Another advantage over Venmo is that they just introduced “Boosts” so if you use the card at a store you're boosting at you get a discount (e.g. $1 off every coffee store, or 15% off at Shake Shack).
What's Zelle and why can't I transfer between banks?
So to round all of this out, there's Zelle, which is the bank's response (years after Venmo and the Cash App) to the world of digital money transfers.
It's the ability to transfer money between customers interbank and intrabank. It's just got a funny name so that they can brand the whole idea and market it to everyone.
This one is all done through your banking app, and it will probably be labeled with something like “Quickpay with Zelle”. This should be a free transfer between your friends, without the need for a third-party app.
It's likely that you're familiar with the concept of bank-to-bank transferring if you're from outside America, but here, it's a brand new initiative.
Prior to Zelle, you needed to “Wire” money which is still an option but usually costs to both transfer and receive money to and from each other, so it's rarely worth it. The final option for money transfer are ACH payments which are likely how you will be paid your income from your employer, but this is a business to individual transfer traditionally and isn't easily available to everyone.
Useful article!
One other thing I have found in regards to checks is that, once you go to a bank and ask for a certified bank check (i.e. for a deposit on an apartment), the cash comes right out of your bank. If you then don’t end up using the check for any reason (i.e. you can’t agree on broker fees with the estate agent), to get the money back you need to have the agent give you the check back, then physically deposit it at the bank (not through the ATM – in the actual bank).
Ouch!