If you know anyone under the age of 30 then you probably know about Venmo. Venmo is a free app that connects to your bank account and allows you to pay your friends electronically as long as you know their Venmo ID. I’ve used the peer-to-peer payment service to fund my kids and other service providers — like our dog walker — for years. Up until recently, Venmo, owned by the payment processing firm PayPal, could only be used for relatively small monetary exchanges. Even my small business wouldn’t qualify to use the app — believe me, I tried.
But Venmo is changing — and the change could have a very big impact on two million online merchants, both big and small. Last week, PayPal announced that it is expanding the features of Venmo so that it acts more like Apple Pay and even PayPal, according to a USA Today report. Now when users shop online they can use pay with their Venmo app wherever PayPal is accepted.
The move is important because it taps a significant demographic — young buyers — who are loyal users and may either not have a credit card or just be more comfortable paying for products using the app. Venmo processed $9 billion in transactions in just the last quarter.
Although Venmo has been free to use for both parties, the new features will require retailers to pay a transaction fee similar to the amount they would pay PayPal — but they may be able to take advantage of Venmo’s very popular social feed to promote their products in the future. Other popular features like allowing customers to split payments with their friends, would also be available.
“We have a tremendous amount of runway ahead of us as consumers are choosing mobile as their primary computing device and mobile is becoming the primary way consumers want to shop and buy and that’s become a great tail wind for us.” said PayPal Chief Operating Officer Bill Ready in this MarketWatch report.
That’s potentially good news for PayPal. But it’s also good news for small merchants looking to make the buying experience as easy as possible for younger customers.