[venmo] How Venmo Built Passion around a payments brand

Whaaat?

In just seven years, Venmo has grown from a fledgling peer-to-peer app for transferring money into a booming company with millions of users and an annual payments volume topping $19 billion.

But what’s even more impressive, says Jay Parekh, its Director/Business Development, is that Venmo – which was purchased by PayPal as part of an $800 million acquisition of payments-processing firm Braintree in 2014 – has managed to build a beloved brand around a normally unbeloved process.

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The aim, Parekh explained, was to distill the magic of Venmo’s peer-to-peer app into a retail tool, so that merchants could reap the benefits. And the insights from that exploration may ultimately have implications that go far beyond the payments sector.

“We discovered a lot of useful lessons that guided the development of this new product,” said Parekh. “But we also realized that a lot of the lessons are relevant for other mobile companies that want to build a really rich experience and be as beloved a product as Venmo.”

One of those lessons, Parekh asserted, is that it is essential to understand and address customer pain points. For Venmo, that meant reducing the awkwardness of exchanging money.

A second lesson that emerged from Venmo’s process of self-reflection is that products and services have a context, and shifting that context – by adding emojis and notes to money transfers, for example – can change the consumer experience.

A third lesson from Venmo’s journey is that brands can become part of people’s conversations by creating experiences, and not just transactions. For example, Parekh pointed out that when Venmo users exchanged money for pizza, they rarely mentioned the pizza-delivery companies in their feed on the app. But when it came to ridesharing or short-term rentals, brands like Uber, Lyft and Airbnb received a ton of mentions.

My 2 cents:

A lot of people wonder what Venmo’s secret sauce is, especially when considering its juxtaposition with PayPal, the parent/acquirer, and it turns out, most speculation was pretty close and classic: eliminating a pain point and improving engagement by adding a social feature.

The key to Venmo’s unique success lies in the third lesson: making it so that a brand can transcend a service and become part of the users daily journey. I theorize that the unsung hero of this phenomenon was Venmo’s (intentional?) targeting of the college crowd. When a service meets its ideal crowd, the odds of bridging the service to verb gap (ie. ordering a rideshare vs. ubering, paying for something vs. venmoing) is much more likely.

Drawing a parallel between Venmo and another crowd favorite Snapchat, I look forward to seeing how and if Venmo will be able to effectively drive growth and innovation as pressure fro profitability mounts.

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[paypal] Big Banks Roll Out Instant Payments Service; Should PayPal Be Worried?

Whaaat?

A number of huge U.S. banks are joining a new service that aims to bring real-time, peer-to-peer payments to consumers, but it’s unclear if the service will actually be able to take on the incumbent, trendy peer-to-peer service Venmo, which is owned by PayPal.

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The banks are hopping onto a service from Early Warning, which unlike Venmo will deliver money from one account to another in seconds. Venmo transactions, in comparison, take around one to three days to be finalized.

[On the other hand…]

“Banks have been trying to create PayPal competitors for more than 15 years with spectacularly little success,” said Wedbush analyst Gil Luria.” In fact clearXchange has been around for several years with no discernible results.”

The thing is, consumers really like Venmo already. During the month of January, more than $1 billion was transferred on Venmo, more than 2.5 times the amount transferred on Venmo in January 2015 and more than ten times the amount transferred on Venmo in January 2014.

For now the only real differentiator is speed, and that may not be the case for very long, considering that the network Venmo uses to transfer funds plans to begin processing payments more quickly in September, according to Reuters.

My 2 cents:

At this point, the mechanics of peer-to-peer cash transactions isn’t rocket science, which warrants the question: why are financial institutions taking so long? The idea of substituting PayPal or Venmo might not be the crux of this debate though. Banks are (still) where people keep their money, so PayPal still needs bank cooperation (no, not being Venmo compatible does not drive one’s banking decisions… yet). With this ability to foreclose would-be competitors in fintech, it looks like banks could easily outsource the expenses that’d go into investing into their own (likely unpopular) p2p cash transfer product to existing and emerging fintech players. Let the best and most popular player have access to accounts!

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[paypal] Paypal Overhauls Its Mobile App / Stop Using Venmo

Whaaat?

PayPal’s mobile app is getting a massive overhaul today, representing the first time in the history that the company has rebuilt its app from scratch. With the redesign, PayPal is offering a simplified experience for users who want easier ways to make peer-to-peer payments, pay in stores, order food, manage their account settings, and more.

On the other hand…

Venmo lets you send and request money but only if you deposit and withdrawal those funds through your Venmo balance. All the while, Venmo itself is essentially holding your money hostage.

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PayPal’s New App…

PayPal’s old version put a heavier focus on using PayPal in stores from the first launch, the new app puts the sending and receiving functions front-and-center.

It makes sense that this feature would be better highlighted in the new application, as PayPal says it has seen over 100 percent growth in this area over the past couple of years. In addition, the company reports that now 1 in 4 of its transactions take place on mobile.

The app features a cleaner, more modern color scheme, iconography, fonts, and layout which makes it better resemble something a startup trying to compete with PayPal would build rather than something from an older and established payments company.

…Sounds like Venmo

The downsides of Venmo start to make sense when you realize that Venmo isn’t just some cute little startup—it’s owned by payment Goliath PayPal. Venmo started in 2009, but it was soon gobbled up by Braintree, an enterprise-level payment processing outfit, which was in turn gobbled up by PayPal in 2013. The whole holding-money-hostage model is actually pretty similar to how PayPal has always worked, and as time goes by, the two separate services are starting to look even more similar. In fact, PayPal just redesigned its mobile apps, and boy do they look pretty Venmo-y now. The only thing that’s missing is that privacy-invading stream of emoji that shows you every transaction your friends and even random people around the world are making.

My 2 cents:

Everybody loves Venmo and most people feel ambivalent at best when it comes to PayPal. Intuition would say PayPal’s move is smart and fresh, but how far is the general user base from concluding their money is held hostage and their privacy is being flaunted? More importantly perhaps, how long until the general user base acquires the understanding of competing players and begins to move past lovable beer icons when they realize that the same fees are still charged when you use Venmo or PayPal’s future app (insert the scream face here)!

Full article: PayPal

Full article: Venmo

[venmo] Venmo, beloved millennial app, is finally trying to make some money

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.

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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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