NEW YORK — On a trip to Maine with four friends, Alexander Culbertson racked up $1,300 on gas, hotel rooms, food and drinks.
Instead of splitting all of the weekend’s activities evenly throughout the trip, one person paid for everything. Then, later they all split the final bill using Venmo, an app that lets users pay with a tap and a textlike message.
“It would have been a nightmare for all of us to evenly split every transaction,” said Culbertson, 26, a Boston advertising executive. “If you say ‘I’ll grab beer and you grab the groceries,’ things usually don’t come out as planned. This kept things easy.”
Person-to-person mobile payment services such as PayPal-owned Venmo are catching on as a way to bypass searching for an ATM or splitting a bill on multiple cards when the dinner check comes. They’re particularly popular among millennials.
For Dan Callahan, 22, a digital marketing manager in Philadelphia, using Venmo means avoiding the awkward situation of nagging his roommate for rent because you can request payment via the app.
“I write the checks or pay online for our rent, utilities, and anything else, and at the end of each month, I total it all up and he sends me half,” Callahan said. “And it’s all free. Beats having to get ATM charges from my bank and dealing with cash!”
The services also are growing quickly: Venmo is seeing four times the growth this quarter as it did last year. The service processed $2.4 billion in transactions in 2014 and $1.3 billion last quarter alone. Similar services abound, including Snapcash on Snapchat and Square’s Cashtags which can be used via tweet or text.
It’s still just a sliver of total spending online — which Forrester predicts will reach $334 billion in 2015. But the peer-to-peer payment services are catching on with some more quickly than so-called digital wallets such as Apple Pay or Samsung Pay.
Rohan Gandhi, 24, a consultant in Washington, D.C., said when his friend lost a debit card while traveling with him in Cambodia, he was able to foot all the bills and then be “Venmo-ed” back instantly by his traveling companion.
“In terms of convenience, us 20-somethings are never without our phones, and the app is incredibly easy to navigate,” he said.
The services link to your bank account, debit card or credit card. (In Venmo’s case, it’s free to link to your bank account or debit account, but credit card transactions cost a 3 percent fee.)
You first have to connect to other people who have signed up for the service. Then, you type in the amount you want to send someone, add a short message about what the payment is for, and hit send.
“I like the convenience of it — primarily that immediacy,” said Sierra Davis, 25, a newspaper writer in Los Angeles.
Security works the same way it does for any app that stores your bank or card information. That means it might be accessible if someone steals your phone. And the fee for using credit cards discourages their use, even though credit cards are usually fraud-protected for anything over $50, unlike some bank accounts and debit cards.
Cynthia Larose, chairwoman of the privacy and security practice at the law firm Mintz Levin in Boston, said users should be cautious.
“These days you can’t assume that any system is secure,” she said. “If you’re starting off using a system like this, I wouldn’t use your main bank account.”
Peer-to-peer services have security policies in place but they’re not always as direct as dealing with a bank. Venmo, for example, says users aren’t liable for more than $50 of any unauthorized transfers they find, but only if they contact the company within two days after learning of the theft.
Still, for Davis, like many, the convenience outweighs security concerns.
“Security is always a concern when dealing with finances online. But I bank online, I make online purchases, I’ve used PayPal in the past without a problem. I have a password on my phone, in addition to the password on the app, and I keep a close eye on my finances and trust my bank,” she said.
