Ask any late teen or twenty-something if they Venmo and the answer will likely be yes. Venmo is a preferred payments app for millennials, who use it to split rent, pay for dinner, and other activities. The company reported $2.5 billion of total payment volume (TPV) in Q4 2015 , up 174% year-over-year. But now that Venmo’s parent, Paypal, has been spun out of eBay, Venmo needs to get serious about monetization and that means penetrating business payments.
Coinciding with PayPal’s earnings cycle, Venmo just announced the launch of Pay With Venmo, a set of integration tools that enable merchants to accept Venmo payments from customers.
— Venmo (@venmo) January 27, 2016
The new API creates a payment button that appears in 3rd party ecommerce apps, so that Venmo users don’t need to input their credit card credentials to make a purchase. For launch, Venmo went live with just 2 partners: Gametime, a last-minute ticket broker for sports and music events, and gourmet meal delivery service, Munchery.
While the company has communicated it plans on doing a wider release of Pay With Venmo, it hasn’t yet set a date to do so. That’s because it wants to take its time as it wades into B2C payments. Venmo’s success has come from its engaging user experience that makes payments social and mobile. It doesn’t want to lose that edge when it integrates into merchant sites and apps. “Right now, we’re focused on listening to user feedback on the new feature, so we can make it even more enjoyable,” a company spokesperson said.
Getting merchants to integrate Venmo shouldn’t be too difficult for the company given the merchant network Paypal has developed. Originally used as a payment platform to help eBay buyers and sellers transact with one another, Paypal claims it has over 8 million businesses that already accept Paypal. This can prove to be a strong install-base when it comes time to role out Venmo more generally. Given Venmo’s strong userbase which is said to use the payment app multiple times weekly on average, Venmo expects Paypal merchants would be willing and interested in dipping into the mobile payment’s pool of young consumers. “The great thing about Venmo is that it is organic and doesn’t distract from the experience consumers are trying to have,” a company spokesperson explained. “By accepting Venmo, merchants will be opening their doors to millions of socially connected consumers who already love to pay friends and family with Venmo multiple times every week.”
Last fall, Paypal told investors it would get serious about monetizing Venmo, which is free to use to send money between individuals. It was then that the parent company signaled its intentions to move Venmo into B2C payments, which has a clear revenue model attached to it. Merchants integrating Venmo will pay the same fees they pay to use Paypal.
For the time being, the parent company plans on promoting both Paypal and Venmo as two different payment options. “We see the services as true complements,” a company spokesperson said when describing both products. “This feature not only provides great value to a number of existing Venmo users by enabling them to pay seamlessly for good and services, but we’ll be able to bring our very desirable Venmo base to our PayPal merchants.”