Visa+ expands its availability for PayPal and Venmo users across the US

Visa introduced the Visa+ service in April last year to bridge the gap among various apps in the peer-to-peer (P2P) payments space, allowing for real-time payouts to participating digital wallets.

At the time, Visa+ outlined plans to make the service widely available to Venmo and PayPal users in the US by mid-2024. Expanding on last year’s announcement, the recent development marks the official [consumer] launch of the service with inaugural partners PayPal, Venmo, and DailyPay.

“Visa+ will continue rolling out with participating platforms in the US throughout 2024, flexing our Visa+ capabilities to adapt to unique client needs,” Vikram Modi, head of Visa+ told Tearsheet.

A recap of how the service works: To enable cross-platform interoperability, participating wallets introduce a new user flow that allows eligible consumers to set up or enable a unique Visa+ payname account. The newly created Visa+ payname is associated with a receive-only Visa token stored by Visa and linked to the user’s wallet account. 

From there, a sender can enter the recipient’s Visa+ payname in their participating wallet app and submit the payment. The sending wallet queries the Visa+ service to match the recipient’s payname to the underlying Visa token. It then initiates an OCT push payment through its acquirer to the receive-only Visa token.    

An OCT [Original Credit Transaction] operates as a push payment, where the payment service provider pushes funds directly into the cardholder’s account.

The significance of ‘payname’: Visa+ provides privacy to consumers through its paynames. The service has multi-layered risk controls including mandating KYC screening as a prerequisite to issuing Visa+ paynames to eligible consumers and data protection through tokenization. These measures can work in tandem with clients’ own internal guidelines and risk controls to mitigate fraud, according to Modi.

For example, using payment-specific addresses also known as paynames means that users don’t have to share their phone number, email, or other account details with other users to receive funds. Additionally, users’ account details are tokenized, which means that the sending wallet does not see the recipient’s wallet information, and vice versa. 

The idea driving the launch of Visa+: In the past decade, there has been a notable shift in consumer payment preferences – money isn’t so much changing hands anymore as it is moving from one payment app to the next. In 2023, US P2P payment volume was estimated at $993 billion, mainly driven by widespread smartphone adoption and a growing preference for online commerce.

The rise in P2P transactions is driven largely by Americans, particularly younger individuals, drawn to payment apps in part due to the rewards and loyalty programs offered by providers. Almost half (47%) of US adults using P2P payment apps such as Venmo, Zelle, PayPal, and Cash App regularly use these platforms to split bills for meals, groceries, and other everyday expenses.

Until recently, there was a notable absence of widely available solutions that allowed users of different payment systems to connect and exchange transactions in real time, such as transferring funds between Venmo and PayPal. This gap prompted the launch of the Visa+ service.

While the adoption of any new service presents its challenges, Modi sees the launch of Visa+ as essential and timely. The initiative aims to address fragmentation and promote standardization across diverse payment systems to achieve improved consumer experiences.

“With a continued expansion of Visa+ with enabler partners, we are deepening the footprint of Visa+ with end-customers as these enabler partners serve a broad base of merchant and digital wallet clients,” Modi explained.

In addition to improving consumer experiences in P2P transactions, Visa+ also offers cross-platform interoperability for business-to-consumer (B2C) payment flows via its APIs. This integration streamlines operations for wallets, neobanks, fintechs, gig platforms, and other payout providers.

“Visa+ simplifies the process by eliminating the need for multiple individual agreements typical in closed-loop peer-to-peer ecosystems,” said Modi.

Last month, DailyPay introduced Visa+ into its offerings. This integration allows DailyPay users to deposit their earned wages directly into Visa+ linked accounts, providing access to their funds before their scheduled payday. This enables users to then utilize various P2P digital payment apps for further transactions.

Besides increasing user satisfaction and providing ways for users to manage their financial needs between pay periods, Modi believes the service contributes to “driving the overall adoption of EWA solutions in the B2B2C model”.

Other financial firms like Astra, Brightwell, Cross River Bank, and Fiserv are also gearing up to integrate Visa+ APIs into their platforms by fall 2024. This integration will enable them to offer a range of payment functionalities to their digital wallet and merchant clients, including real-time business-to-consumer disbursements, streamlined transaction processing, and fraud management capabilities.

Additionally, Visa+ is planning to roll out additional features and improvements to support its expansion into new markets beyond the US and cross-border use cases, according to Modi.