[PeterisP]

Well yes, that's kind of the point - replicating this part of the experience of paying someone directly in cash is illegal. No matter what Venmo wants it can't replace that (part of the) experience and, more importantly, neither can any of their competitors. So you either keep using cash or (no matter if you pick Venmo or someone else) get a different experience.

Also, don't forget that above certain amounts cash between friends also needs to obey a bunch of reporting rules and can not be entirely private. Simply taking a briefcase of cash from your buddy and leaving it at that is illegal.