Venmo – When Payments Go Social
Venmo, initially developed to allow payments to be sent via SMS. , has been the leader in the merging social media with payment services.
Social media is a dominant force in most people’s lives, it was only a matter of time before social media and fintech collided. Venmo, founded by college roommates in 2009, has been the leader in the socialisation of payment services.
Initially, Venmo was developed to allow payments to be sent via SMS. It soon developed into an app that now allows users to request and send money between friends as well as through businesses. Some of the most popular functions of Venmo are:
- Splitting food bills
- Sharing drinks bills
- Paying rent
How Venmo Grew
Venmo’s USP started out as its cost-free transfers. Unlike rival businesses users didn’t have to pay percentages to get paid instantly, or wait days for free interbank transfers.
By its very nature, if you wanted to use the system, your network needed to be on board too. Peer to peer transfers needed users’ peers to buy in. Once one member of a social group had the app, everyone else had to download it, and by syncing with Facebook contacts Venmo got a lot of free marketing. Until now around 40 million users have been active on the app in the last 12 months.
Fintech Goes Social
The easiest way for an American (and it is only available in the US) to sign up to Venmo is through Facebook. Link your card, sync your contacts, you’re good to go. Once you start spending on Venmo, your transactions automatically show on a social media-esque news feed. You can see who sends their part of the check late, who pays the bills in your buddies’ apartment, who’s Netflix and chilling with a pizza.
Venmo encourage this type of interaction by suggesting users denote their payments using emojis, even breaking down the most used icons by value and location. Bitmojis (personalised, user generated cartoons) were added to the communication channels in May 2019, allowing for even more social media type interactions.
Although it would seem that most customers understand the social media style of Venmo, the Federal Trade Commission (FTC) stepped in. In early 2018 they settled a complaint with Venmo’s parent company PayPal, raising concerns about the auto-syncing of Facebook contacts, as well as the opt-out nature of the transaction feeds.
The American regulator’s involvement led Venmo to change the way its customers are informed about the social features. It didn’t seem to dent the use of the app, with 2018’s Q4 payments totalling US$19bn, a year on year increase of 80%.
PayPal don’t seem to be in a rush to monetise Venmo, and they are sticking to the age-old model of charging businesses per transaction. The future for the leading fintech social media platform must surely lie in going international, with so many markets willing to adopt new technologies.
Nothing in is the pipeline as yet, but bet your Bitmoji’s the future of Venmo is international.