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LIVING VENMO TO VENMO

What the rise of digital handouts on Venmo and Cash App says about our fraying social safety net

Reuters/Mike Segar
What’s in your digital wallet—and can you spare some?
By Jenna Drenten

Jenna Drenten is an associate professor of marketing at Loyola University Chicago.

A college student pleading for grocery money. A driver in need of an unexpected car repair. A worker out of a job because of the COVID-19 pandemic. A single mom who needs to pay the internet bill to support her kids’ distance learning.

In all of these cases, people turned to Twitter to ask for financial support during the pandemic. Not thousands of dollars. Just a few bucks. Whatever online followers could spare.

As a consumer sociologist, I study digital culture and social media. I’ve noticed an uptick in these requests on Twitter, TikTok, and Instagram, which are made possible by the growing popularity of peer-to-peer payment platforms like PayPal, Venmo, Cash App, and Zelle.

This diverges from traditional crowdfunding in which official online campaigns are set up for lofty fundraising goals. And it isn’t the same as asking a friend to cover the tab.

Digital handouts on social media that help people make everyday ends meet point to the power and generosity of online communities. At the same time, they represent yet another sign that there are deep holes in America’s social safety net.

Brother, can you spare a dime… online?

In America, asking strangers for money has long been stigmatized.

In England, during the 16th and 17th centuries, the begging poor were criminalized, with poverty portrayed as a moral failing caused by lack of industriousness. In reality, the ruling class wanted to control the labor market and discouraged government-funded welfare. These ideals of industriousness were shipped to the US and repackaged as the “American dream,” the credo that anyone with pluck can pull themselves up by their bootstraps.

The subtext? If you can’t, it’s your own fault.

For these reasons, the stitching together of a social safety net has been a fraught political enterprise, with starts, stops, and backsliding through the decades. People in need are often forced to turn to churches, family, and the generosity of strangers.

The internet, however, ushered in new ways of asking for money, particularly with the rise of crowdfunding, the practice of pooling donations from a large number of individuals. The first known online crowdfunding campaign launched in 1997, and dedicated crowdfunding platforms cropped up online throughout the 2000s.

Through crowdfunding, people who may not have had access to financial resources can raise money for healthcare treatments, adoptions, college tuition, racial justice, and other causes.

Sending cash with the click of a button

Peer-to-peer payment platforms like PayPal, Venmo, Cash App, and Zelle have made it even easier to ask for and receive cash assistance.

Over 60% of American millennials report using at least one of these payment platforms, and a new survey from Zelle suggests Gen X and baby boomers are overcoming their skepticism of digital cash transfers.

When friends go out to dinner, they can simply split the dinner bill using the mobile apps. Roommates can use it to pay rent, and vendors can use it to directly charge customers.

But these apps have also given rise to a growing cultural trend: asking complete strangers for money via social media.

The process is simple. Write a social media post about a financial need. Include details for your preferred peer-to-peer payment platform: a $Cashtag on Cash App, a username for Venmo, a custom PayPal.me link. Share the post. Within a few clicks, a stranger can stumble upon your post and complete the requested cash transfer.

By design, peer-to-peer payment platforms remove fees incurred through credit card donations or more formal crowdfunding websites. The full donation goes directly and instantly to the person in need.

The difference from crowdfunding

Some might be quick to categorize this practice as traditional crowdfunding, but my research suggests social media-based cash transfers are unique in a few ways.

Traditional crowdfunding is shaped like a funnel: many donors contributing to one centralized recipient, such as a civic organization or charitable cause. Crowdfunding websites like GoFundMe and Kickstarter provide a central portal for tracking and safeguarding money exchange.

Social media-based requests for money are shaped more like a web: many potential donors contributing to many recipients in one-off transactions. This web of financial requests is sprawling on social media. There’s no website to visit to track the progress of a fundraiser, and fewer safeguards are in place to protect donors from scams.

In traditional crowdfunding, the financial goals are lofty, sometimes in the hundreds of thousands of dollars. Crowdfunders create formal campaigns with detailed explanations of why they are raising money, how the money will be used, and who will benefit. Progress toward a financial goal is publicly tracked.

In contrast, social media-based solicitations allow for smaller, one-time requests, like covering a utility bill. It’s akin to spotting a stranger a few bucks.

This web of financial requests and offers is often catalyzed by a common hashtag. For example, #SettlerSaturday encourages donations to Indigenous people and causes; #TransCrowdFund solicits financial support for transgender and nonbinary individuals; and #ShowUpForWishes provides a space for people to make more general financial requests for things they want—not just what they need.

The hashtags create communities for people to seek financial support. These communities engage in “signal boosting” by sharing a post widely within and across social media platforms, in hopes of getting more attention. Shares, likes, retweets, and cross-posting create more potential for these social media-based cash requests to go viral, which can lead to more donations.

With a steady stream of financial requests coming through social media, individual donors can act as a dam for individuals to survive.

Living Venmo to Venmo

But as these requests for money become more popular, what does it say about the lack of public resources for individuals struggling to pay for needs like rent, tuition, or surprise medical bills?

During the coronavirus outbreak, people flocked to traditional crowdfunding websites like GoFundMe to try to save their businesses or cover healthcare costs. Most of these campaigns, however, fail to meet their goals.

These larger campaigns have overshadowed the constant flurry of smaller requests for digital handouts on social media.

To me, both types of requests—large and small—reflect a systemic failure to protect citizens facing financial hardship. Government programs like Temporary Assistance for Needy Families and food stamps provide much-needed resources to help people make ends meet. But research suggests many of the people most in need are often disconnected from the social safety net, as individual eligibility varies and states implement these programs differently.

For many, living paycheck to paycheck has been transformed into living Venmo to Venmo. It would be easy to classify the rise in requests for digital handouts on social media as just another iteration of the “begging poor” – bringing to mind all of the morality myths and stigmas surrounding poverty.

But it’s bigger than that. The pandemic has revealed gaps in the social safety net, and the reliance on digital handouts is a microcosm of the financial uncertainty facing Americans.

Donating to strangers—and asking for digital handouts—is not a bad thing. But the ad hoc willingness of individual Americans to support one another financially shouldn’t act as a substitute for more permanent, systemic solutions.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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