Real friends don't request money digitally. Shutterstock.com

I love Venmo. But could it harm my friendships?

While in college, my roommates and I used a sophisticated system to ensure we repaid loans to one another: The Dry-Erase Board Method.

The board was affixed to the fridge, the only place 20-year-old men are guaranteed to look. There, we stringently recorded who owed whom money:

Nate owes Brendon $20 for groceries.

Everyone owes Matt $15 for cable.

It failed miserably. On the first of each month, the board was unchanged. Then the hunting began; roommate taking roommate aside, politely asking for his money. It was woefully inefficient and full of awkward confrontations. Nonetheless, old-fashioned dialogue always led to arbitration. Debts were settled and friendships endured.  

Increasingly, however, young urban residents are digitizing the mediums through which they repay one another. “Mobile wallet” smartphone apps like Venmo, SquareCash, and Google Wallet enable users to link their bank accounts. With just a few clicks you can instantly deposit your share of the monthly rent into your roommate’s account. Or, alternatively, issue a $3 “request” for repayment if you picked up the full pizza tab the night before. No longer must we wait for the indebted to find an ATM. Hand-written checks are obsolete, too. The time-sapping inefficiencies of the days of the dry-erase board have gone by the wayside.

But so has face-to-face, civil negotiation. And the health of our relationships will suffer because of it.

*     *     *

“What!? Really?”

My friend abandoned his steak and cheese omelet, hanging his head in disbelief. The source of his anguish? An unexpected Venmo request from his roommate’s girlfriend: $60 for a bicycle. She left him the bike when she moved out of town. It was damaged and in need of a serious tune-up. He assumed it was free of charge. His flashing iPhone indicated, however, that he was on the hook for 60 bucks.

“I guess I’ll just have to pay it,” he murmured.

Mobile wallets are convenient. But far from perfect. (Sam Sturgis)

As I witnessed that morning, mobile wallets can create uncomfortable gray areas when used unwisely. An unannounced mobile money request from a friend, family member, or colleague is an alarming thing to receive. In some cases, it fosters an awkward sense of guilt: Does this person really think I'd forget to pay them back? In others, a sudden digital request can hijack what could have been an amiable negotiation.

Misunderstandings about the appropriate mediums of exchange, says one economic sociologist, can destabilize our relationships. In fact, the ways in which we pay one another might be more important than the value of the currency itself.

“The idea that a dollar is a dollar is a dollar is wrong. Each dollar is not the same,” says Viviana A. Zelizer of Princeton University. Some economists argue that money is objective to the complexities of social networks, deviating only in value, supply, and demand. Zelizer, on the other hand, sees money in constant flux from one generation to the next. The rise of gift money in 19th-century America, which she writes about in her 1996 study, “Payments and Social Ties,” supports this claim:

“Defying all notions of money as neutral, impersonal and fungible, gift money circulated as a meaningful, deeply subjective, nonfungible currency, closely regulated by social conventions. At Christmas, weddings, christenings, or other ritual and secular events, cash turned into a dignified, welcome gift almost unrecognizable as market money and clearly distinguished from other domestic currencies.”

From a historical standpoint, then, the utility of Venmo and other mobile wallet applications is not unprecedented. “[I]n order to make sense of their complex and often chaotic social ties, people innovate and differentiate currencies,” Zelizer wrote nearly two decades ago.

“I basically predicted them,” she says today, laughing.

This latest monetary revolution is led by young urbanites living fast-paced, highly digital lifestyles. NYC, L.A., Seattle, San Francisco, and Boston are among the cities transferring most often with Square Cash, according to Forbes. The average user of Splitwise, a similar mobile app that allows people to monitor informal debts with friends, is only 27. And users of Venmo transferred over $460 million in the second quarter of 2014, according to Business Insider. Similar to the meteoric rise of Uber, young city residents find mobile transfers convenient for their on-the-go lives. But underneath the convenience there are costs.

(Sam Sturgis)

Mobile wallets function by creating uniformity within our social networks. The diverse contact lists inside our phones—parents, ex-partners, one-night stands—are funneled into these peer-to-peer money markets. Traditionally, we would exchange money with our best friend and grandmother in separate ways. Our expectations about a colleague repaying us are different from those we have for our siblings. “We care about which money we use and receive,” Zelizer says, “and which money it is depends on the relationship.” By exchanging money through mobile wallets, we sacrifice our unique monetary relationships for the convenience of a digitized market. The network flattens.

“Paradoxically, the more we depend on market services—and market logic—the greater its subtle but real power to undermine our intimate life,” wrote Arlie Hochschild in a 2012 New York Times Op/Ed.  Hochschild, a sociologist from the University of California, Berkeley, sympathizes with the appeal of mobile wallets; they facilitate honest transactions and eliminate potential face-to-face confrontation. But she cautions those who assume mobile wallets are free of social externalities.

"What we have are a thousand subtle ways in a face-to-face and voice-to-voice interaction of working out a relationship,” she says. Those are largely absent in a digital network.

Mobile wallets should, and undoubtedly will, have a role in our monetary relationships going forward. (I sent a friend $20 while writing this.) But certain ground rules need to be established: Clear and direct communication is a must when exchanging money, which is a sensitive topic for everyone. A mobile request with a small text box reading "RENT" is not personal. A chain of emoji is not a clear message. Venmo and similar apps should be used judiciously and regulated to their most bare-bones function: transferring money.

Everything that gets us to the point of that exchange—communicating, negotiating, eating, and drinking—is best served by you.

Top Image: PathDoc / Shutterstock.com

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