Whaaat?

Since launching in 2009, Venmo has been great at one thing: letting people easily send money to each other. However, to date, it hasn’t been very good at making any money. Now, with a new feature called Pay With Venmo, the PayPal subsidiary is going to finally try to change that.

Tell me more!

Pay With Venmo will be a payment option for people shopping within apps, similar to the PayPal button that online shoppers are familiar with. When a Venmo user is ready to make a purchase in an app, they won’t have to plug in their credit card info, instead they will simply sign in and pay with their Venmo account.

Sources told Quartz that the feature will eventually be rolled out to PayPal merchants. And Venmo is likely to leverage the relationships of its fellow PayPal subsidiary Braintree, which processes payments for popular apps like Uber, AirBnB, and Stubhub.

Venmo has demonstrated the popularity of peer-to-peer payments—it grew 202% over the past year and processed $2.1 billion in transactions in the third quarter of 2015. But profit margins for money transfer services are extremely thin, and technology is quickly making the act of sending money a commodity.

PayPal CEO Dan Shulman said in its most recent earnings call that Venmo will charge its merchant partners the same cut that PayPal charges.

My 2 cents:

Sooo Venmo is going to be just like PayPal (plus the fun social network thing with the beer icons, minus the credit card info). Sounds like a fair move on PayPal’s part, albeit less creative/innovative than perhaps considering a “float” monetization alternative. What’s most interesting though is the idea that money transfer services are rapidly commoditizing; what does that mean for ApplePay and co.? Is money transfer destined to be a convenience that keeps people tied to tech giants’ ecosystem and where does PayPal figure in on this?

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