Send cash so I'll know you are OK

By J. Carlton Collins, CPA

Q. Is there an electronic payment solution for reimbursing friends or giving money to my children so I don’t have to carry as much cash, and also so I can track my personal transactions?

A. PayPal’s website provides the ability to send funds to friends and family for free, directly from your PayPal account to your recipient’s email address or smartphone number. To use this service, visit, click the Send option at the top of the screen, enter your recipient’s email address or phone number, enter the amount you want to transfer, and then click Continue. On the next screens, click the Friends or family button, log in to your PayPal account (if you have not already done so), and then click the Send Money button to complete the transfer. The recipient will need to respond to the email or message directing him or her to either log in to or create a PayPal account to receive the transferred funds.       


You might also try PayPal’s Venmo app, which allows you to share money with others for free without involving PayPal accounts. Venmo links to your bank account or debit card and enables you to use your smartphone to instantly pass money to your friends using Venmo to split a dinner bill, send a birthday gift, or reimburse a friend. There is no fee involved, and Venmo keeps a record of all of your transactions, including your transaction description. (As an additional option, both methods mentioned above allow you to transfer funds from your credit card accounts for a 3% transaction processing fee.)


To set up Venmo (using the Facebook setup option), download the app and click the Use your Facebook info button to identify your Facebook friends who have Venmo accounts (or, as options, you can search for Venmo users within your Twitter followers or enter the email address for each Venmo user with whom you want to exchange funds). Continue the setup process by entering a desired username, email address, and password to create your account. From the main screen, select Banks & Cards and enter your bank account information or a debit (or credit) card number, including the card’s expiration date, security code, and ZIP code. To make a payment, click the New Transaction button in the upper-right corner (the icon of a pencil and a plus sign), select a payment recipient (from your list of friends with Venmo accounts), enter the amount and a transaction description, select your desired privacy setting, click Pay, as pictured above, and then click the Confirm payment button. On the following screen, select the bank account or debit (or credit) card you want to use and select the Yes, make this my funding source button to complete the transaction. The recipient’s Venmo account will hold on to the funds until he or she selects the Cash Out button, at which time the funds are transferred to the recipient’s linked bank account. Note: A Venmo receivables transaction can also be set up to request money, such as a reimbursement of utility expenses from a roommate.

How safe is Venmo? Venmo claims that it uses financial-institution-grade security and data encryption to guard against unauthorized transactions and to protect your personal and financial information. If your smartphone is lost or stolen, you can revoke your Venmo account online to prevent further use. Venmo says this solution is intended for payments between friends and people who trust each other, and the company advises you to avoid making payments to people you don’t know. Still, if you do decide to use Venmo, it may be a good idea to link your Venmo account to a bank account that carries a minimal balance.

Warning: By default, the payments you make through Venmo are viewable by other Venmo users. (Upon creating my initial Venmo account, I was shocked to see the intimate details of the Venmo transactions made by my friends and family members.) To make your Venmo payments private, be sure to uncheck the Share Note on Facebook and Share Note on Twitter boxes when creating the transaction, and/or adjust the privacy settings from the privacy dropdown menu by selecting Participants Only.

J. Carlton Collins is a technology consultant, a CPE instructor, and a JofA contributing editor.

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