Venmo evolves from a mobile peer-to-peer payment platform to a more robust set of financial services.

WHAT HAPPENED: PayPal, Venmo’s parent company, is seeking to monetize the peer-to-peer payment platform by extending it to online retailers.

Why it matters

  • Since launching in 2009, Venmo has become an omnipresent mobile payment method—a seamless way to send a roommate your half of the monthly utilities payment or request your friends for their portion of the dinner bill. The platform has an estimated 38 million users and $19 billion was exchanged via the app in Q4 2018 alone, up 80% year over year. However, these peer-to-peer transactions are not profitable for the company, which PayPal has tried to counteract after acquiring the payment platform in 2014. To do so, Venmo is growing into an array of financial services. In October 2017, Venmo was extended as a checkout option at every online retailer that accepts PayPal more than a year ago (more than 2 million). Some retailers also sell Venmo debit cards—a partnership with MasterCard, which allows consumers to pay with the card wherever MasterCard is accepted, as well as withdraw money from a Venmo balance at an ATM machine. Every transaction is recorded on the Venmo app, seamlessly merging the company’s offline and online presence.
  • Other mobile peer-to-peer payment platforms have sprouted to obtain a share in the market, including Zelle—created by Bank of America, Wells Fargo and JPMorgan Chase—which was responsible for $75 billion in 2017 transactions, compared to Venmo’s $35 billion. Venmo, however, has a leg up on these competitors thanks to its strong millennial base, likely tied to the sociability of the platform, which showcases a feed of transactions, much like that of Instagram or Facebook. And now that Venmo is being offered by more online retailers, it could see greater resonance as more shoppers vie for a frictionless payment service.