The popular person-to-person payment service Venmo has continued to grow in terms of its user base and total payment volume, but with transaction fees waived for bank account and debit card based payments the company likely hasn’t yielded much profit. Intent on changing that, parent company PayPal recently announced plans that will enable merchants accepting PayPal to begin accepting Venmo for business-to-consumer transactions online and via mobile apps. PayPal CEO Dan Schulman said Venmo will be “fully monetized” by the end of 2016.
The Venmo P2P money transfer service and mobile app has enjoyed strong growth since its initial release in 2009. The company was purchased by Braintree for $26.2 million in 2012, and Braintree was subsequently acquired by PayPal for $800 million in 2013. Now PayPal has spun off from eBay as their own company and has plans to expand Venmo from just a P2P payment service to a payment service merchants can utilize for accepting payments from customers.
Dan Schulman, CEO of PayPal, discussed plans to expand Venmo as a payment option available for online and mobile payments, and that the company will start by targeting existing PayPal merchants. Tests will start by the end of this year where merchants will be able to accept Venmo and pay the same rates they do to accept PayPal, typically 30 cents per transaction plus 2.9 percent.
The P2P payments business is booming, but Venmo isn’t alone in this market that Forrester Research expects to grow to $17 billion by 2019. MasterCard, Square, Facebook and Snapchat offer P2P payment services as well. But Venmo benefits from a large PayPal user base and has shown strong growth in the last year. PayPal announced their plans to expand Venmo to merchants during their third quarter earnings report at the end of October, and in the same meeting announced that Venmo processed $2.1 billion during that period. This marked a 300 percent increase from the same period one year ago when Venmo handled $700 million in payment volume.
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