Founded in 2009 by two college roommates, Venmo is a peer to peer money transaction service that allows users to link up their payment methods and easily send money.
PayPal acquired this app in 2013 under Braintree for $800 million and has become the go-to for many users to send and receive money easily on their mobile devices.
The app is especially popular among the younger folks. College students pay each other frequently via this channel, due to its easy and cost structure.
Businesses opt-in this payment option to tap into the valuable target market of young people, encouraging them to buy their products and services.
The application also has a social feed with which you can share comments on every transaction that you make.
This feature is beneficial to the businesses that include Venmo as a payment option for their clients as it brings them social advertising.
With Venmo, you can perform activities like splitting bills, requesting money, and paying cash to merchants.
Despite the benefits that Venmo offers its users, its use is mostly free.
This brings a question to mind, which is, how does Venmo make money?
Venmo does make money by charging authorized merchants when you purchase from them.
The main revenue-generating aspects of Venmo’s business model, the app charges businesses a 2.9% fee when consumers use the app to pay.
Also, if you are using your bank account or debit card to connect to Venmo, your transactions are free – but, if you are using a credit card to pay you will have to pay a 3% fee of the purchase amount.
They also charge a 1% fee if you want to instantly transfer the funds to your bank account rather than wait the standard 1-3 business days.
As of July 2020, Venmo has partnered with Uber as a payment method. Riders and customers with Venmo installed on their device can now use Venmo to pay for their Uber rides and Uber Eats order
Venmo is one of the first mainstream P2P payment app to market, provided simple and costless transfers from one person to another, a service that conventional banks were slow to provide.
They’re trying to catch up, but slowly.
Let’s see what the future hold for our friends at Venmo.
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