Once known for splitting dinner tabs and birthday presents, Venmo is seriously promoting everyday consumer spending.
The PayPal-owned app rolls out a series of updates on Wednesday, showing a clear shift from its peer-to-peer roots. Goal: To become a full-fledged financial tool that people use for everything from retail check-outs to earning cashback rewards.
Within the update, Venmo is making an enhanced debit card experience. Users can now earn up to 15% cashback at well-known retailers such as Walmart, Sephora, McDonald’s, Lyft and Walgreens. These rewards can be activated directly in the app. This card currently supports tap-to-pay, works internationally with no foreign transaction fees, and includes automatic reload when the balance is low.
Also, Venmo is making a big move when checking out. The app is currently accepted by major brands such as Uber, Instacart, Domino’s and Tiktok Shop. According to CNBC, the retail push is part of a broader plan to not only pay back to friends, but also incorporate more into everyday spending.
“We’re committed to providing a range of services to our customers,” said Diego Scotti, EVP and General Manager, PayPal’s Consumer Group.
It’s a timely pivot. Venmo has over 64 million active users each month, but is behind in key areas. Currently, there are only a small percentage of users who have Venmo debit cards, compared to the 44% penetration of Cash App. And the volume gap is wider. Benmo processed a $13 billion debit card transaction last year, but the cash app won $152 billion.
PayPal is clearly trying to close that gap. In a recent revenue call, CEO Alex Chris reported that nearly half of US brand checkouts have already been run through PayPal’s upgraded experience, and that number is expected to increase as it expands in Europe.
He also shared that around 2 million people used their PayPal or Venmo debit cards for the first time in the last quarter, marking a 90% increase from the previous year.
While the numbers are moving in the right direction, Benmo still has work to do. PayPal did not provide any specific numbers, but its revenues increased 20% year-on-year. Total payments reached $75.9 billion, and Venmo usage rose 50%. Monthly active users of debit cards increased by around 40%.
Chriss has made it clear that better monetization Venmo and other past acquisitions like Braintree are top priorities. Part of that effort will include ensuring Venmo is accepted with more checkouts and building features that users want to use balance rather than transferring balance.
That it needs to grow is just becoming more urgent. Both the Venmo and the Cash app have lost ground in peer-to-peer payment space, with Zelle grabbing 66% of the market volume from 55% in 2019. Currently, Venmo has dropped by 19% from 21% the previous year.
Still, Venmo is betting on its strong brand, social feel and loyal user base. With new cashback rewards, wider retail acceptance and debit card upgrades, the app aims to grab a larger share of consumer wallets.
Venmo was founded in 2009 by Andrew Kortina and Iqram Magdon-Ismail as a way of paying each other without using cash or writing a check. Instead of acting as a traditional bank account, Venmo connects to a user’s debit or credit card, sends and receives it.
Compared to fintech apps, often compared to fintech apps, Venmo is built for personal use, combining the functionality of a digital wallet with a social feed. Users can transfer money via mobile apps, but both sender and receiver must be located in the US
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