PayPal is finally breaking Venmo out beyond peer-to-peer payments.
During its Q3 earnings call, the company announced an upcoming service called “Pay with Venmo,” which will allow Venmo users to pay at any PayPal merchant.
Venmo was once accepted as a form of payment in some mobile apps through its “Touch” technology, which lets users pay with a single tap. That technology has since been folded into PayPal One Touch. The new Pay with Venmo service is more than tap-to-pay functionality — it’s the app’s first major expansion.
PayPal’s decision to grow Venmo, build’s on traction the app has gained since it was acquired by Braintree.
This quarter, PayPal noted that Venmo processed $2.1 billion of its total payment volume, up from $1.6 billion last quarter. A year ago it was doing less than a billion in transactions. The company says this growth makes Venmo “one of the fastest growing apps in the world by dollar volume.”
PayPal hasn’t developed Venmo much since acquiring the Braintree subsidiary, likely because it wasn’t contributing meaningfully to PayPal’s overall revenue (Venmo only charges a fee when you pay with a credit card, otherwise it’s a free service). But Venmo has an opportunity to earn its keep at PayPal, thanks to its popularity with millennials.
“What this does is it opens up the Venmo user base to our PayPal merchants and it will be exactly the same take rates,” said CEO Dan Schulman, noting that Venmo will take the same fee on transactions as PayPal does. By the end of next year, he hopes to fully monetize Venmo.
For now, Venmo will only be a payment option online and in mobile apps. Though, as PayPal ramps up in-store payments through partnerships with Macy’s and others, there will be lots of room for Venmo to grow.