Payments

Venmo rising: Why PayPal wants you to pay for purchases using the app

  • PayPal's CEO announced that customers will soon be able to use Venmo to pay for purchases anywhere PayPal is accepted.
  • 'Pay with Venmo' is part of a larger strategy to connect with brands and generate additional revenue for the service.
close

Email a Friend

Venmo rising: Why PayPal wants you to pay for purchases using the app

The act of posting payment details on an emoji-rich social feed is about to move to payments for purchases.  Venmo, the peer-to-peer payments service said to be most popular with millennials, is expanding its reach so users will be able to have that same experience when buying things.

PayPal CEO Dan Schulman announced this week that the option to pay with Venmo for purchases will be available for any merchant that accepts PayPal by the end of the year. To use the feature, users will need to enable it from within the app. It’s remarkably similar to PayPal One Touch, with the ability to split payments with friends and share what it calls the “excitement for each purchase” on the social feed.

“We think that’s powerful in the long run to think about Venmo being your most intimate social network,” said spokesman Josh Criscoe. “On Venmo it’s people you’re doing most of your activities with.”

But beyond offering users a back-up payment method, what’s really driving the move is a bigger strategy to connect Venmo to brands and generate revenue. While Venmo processed $6.8 billion in payments in the first quarter of this year and $17.6 billion in payments last year, Criscoe acknowledged that the peer-to-peer payments aspect of Venmo is not a money maker for the company. Venmo subsidizes the costs of the transactions, he said, keeping it free for users. But for ‘pay with Venmo,’ merchants will pay 2.9 percent plus 30 cents per transaction — the same price as PayPal.

“In the long term, it’s a way for merchants and brands to get exposure and connect with more users,” said Criscoe. “There’s a lot of powerful stuff here than just the buy button. We hope that Venmo is something that you can use to pay anywhere and everywhere.”

While ‘pay with Venmo’ was first rolled out in 2014 with selected merchants using the Braintree platform (e.g. Uber, Airbnb), the ability to use it with the millions of brands, including Target and Walmart, is significant, especially as the peer-to-peer payments space gets more competitive with the launch of bank-backed Zelle and rumors about an Apple rival to Venmo in the works.

Despite more competition in the peer-to-peer payments space, Criscoe said connecting the Venmo experience with brands has long been part of its vision.

“Venmo has always been on this path,” he said. “We have a really strong base of customers that are really loyal to Venmo and evangelize about it every day — it’s spread by word of mouth with little or no marketing spend.”

 

0 comments on “Venmo rising: Why PayPal wants you to pay for purchases using the app”

Payments, Podcasts

Payoneer’s Charles Rosenblatt: ‘We found a way to play on both sides of the market’

  • Charles Rosenblatt has a long career in payments.
  • Joining Payoneer recently as chief strategy officer, he joins us to discuss the company's progress and future plans.
Zachary Miller | September 14, 2020
Payments

Ant Group files to go public in what could be the largest IPO in history

  • China's Ant Group has filed for a massive dual listing in Shanghai and Hong Kong.
  • The payments firm has expanding into banking, insurance and investing via third parties.
Zoe Murphy | August 26, 2020
Payments, Podcasts

WePay’s Jennifer Parker: ‘We’re seeing inspiring early pivots with software firms and marketplaces’

  • WePay provides payment APIs to ISVs and marketplaces.
  • CRO Jennifer Parker joins us on the podcast to discuss initiatives she's leading during the crisis.
Zachary Miller | August 06, 2020
Payments, Podcasts

Afterpay’s Laura Nadler on the new loyalty program and expansion plans in the U.S.

  • Afterpay is one of the fastest growing buy now, pay later firms in the world.
  • The US CFO joins us to talk about levers for that growth and the fintech's priorities for 2020 and beyond.
Zachary Miller | August 04, 2020
Payments

Mastercard partners with Microsoft to accelerate innovation across payments

  • Financial inclusion is a big theme for both firms.
  • Microsoft's Azure cloud environment will provide the infrastructure for Mastercard's partners' inclusion products and services.
Zoe Murphy | July 28, 2020
More Articles