Venmo The Popular New App for payments
Venmo today is one of the most popular apps for transferring funds electronically from one party to another. Its explosive growth around the world is largely powered by millennials active on various social media platforms.
How Venmo started
Venmo was created by Iqram Magdon-Ismail and Andrew Kortina who first developed a prototype for sending cash through text messages before moving to a smartphone app system. In 2010, the duo raised $1.2 million in seed money through a round of financing. In 2012, the company was acquired by Braintree that again was taken over by PayPal for $800 million. Venmo emerged in the limelight soon after an aggressive marketing plan in 2015 when PayPal coined the slogan “Pay with Venmo”. Customers were asked to avoid cash or credit cards at retailers and instead use the Venmo app. It was an extremely well-timed ad campaign as the economy then was slowly moving away from people writing checks and visiting ATMs to transferring money and making payments electronically.
Venmo Business Model
Venmo eases digital payments within a social network of known friends usually in close geographical proximity. Unlike its competitors, Venmo does not charge users for sending or receiving money and does not levy any monthly or annual fees. However, payments related to credit cards are charged. The revenue generated by Venmo is through interchange and withdrawal fees, interest on cash, Pay with Venmo, fees for cashing checks, and affiliate commissions on its cash-back program. The company also charges a fee of 3% for all credit card transactions. A debit card is also offered by Venmo on the Mastercard platform. Hence, holders of the card can use their Venmo balance to make purchases wherever Mastercard is accepted in the United States. Withdrawals at ATMs that accept MoneyPass are free but otherwise, a fee will be charged. In 2020, Venmo launched its Venmo Visa Credit Card issued by Synchrony Bank.
Venmo Product Benefits
Venmo offers a range of products’ benefits and services. • Cash-back rewards: Venmo has a cash-back reward when its card is used at select retailers. Safeway (2%), Adidas (5%), Forever 21 (4%), Tarte Cosmetics (10%), and Philosophy (8%) are among the leading brands that offer incentives for using the Venmo card. • Splitting purchases: Venmo provides the option to split costs among one or multiple users of Venmo after a purchase when one cardholder has made the payment. The cardholder can charge the others or split the bill on the Venmo app to keep the fund position updated. There is no need for reminders or waiting to get paid. • Venmo credit card: The Venmo credit card is available in the color of choice like black, white, pink, purple, and blue and is free to set up. Most importantly, the card is contactless, making life easier. It saves a lot of time as transactions are completed with one tap only. The Venmo card can be used at all outlets that accept the Mastercard. Venmo is a great funds maintenance option with redeeming cash-back along the way.