On Tuesday, July 26th, the Uber of P2P payment apps, Venmo, announced that it was ending its in-app payments beta test with Munchery and Gametime and releasing the new feature to all Venmo users.  It also announced a host of additional e-commerce merchants where the in-app payment feature has already been integrated such as Parking Panda, Boxed, Delivery.com, and others.

In the world of in-app payments this may sound like a small thing…nothing more than a me-too occurrence if you will.  Realize that I can already reload the Starbucks mobile app on my iPhone with Apple Pay and Visa Checkout, so adding another in-app payment method is not that revolutionary. Except for the fact that the new in-app payment capability is from….wait for it…Venmo.  Yes Venmo.  The King of mobile P2P.  And Venmo is on almost every Millennials’ phone.  In Q1 2016, according to PayPal’s earnings release, over $3.2 Billion was transferred among consumers using the app, up by $1.26 Billion from the same quarter last year (Q1 2015).  To put that volume in perspective, the currently proposed 2017 budget for the state of Delaware is only $3.9 Billion.

This announcement is very important for Venmo, m-commerce merchants seeking to drive sales and PayPal’s new BFF, Visa.

First, by becoming an in-app payment method, Venmo will now have a source of revenue. It can charge merchants a fee for completing transactions.  This instantly makes the Venmo franchise more valuable to PayPal shareholders.  It’s especially important now that PayPal is a separate company from EBay.

Second, merchants can gain a new payment form that is wildly popular with consumers in general, and Millennials in particular.  Since Millennials tend to shun credit cards, this has left e-commerce merchants with little more than offering up debit card acceptance to consummate a purchase.  But now with Venmo in-app payments, merchants have a new tool.  Why is this important?  According to Javelin research consumers aged 18-24 conduct an average of 10.7 e-commerce purchases a month.  The 25-34 year old segment does 13.9 purchases a month.  In comparison, 45-54 year olds only do 5.4 per month and many of those are done with credit cards. So this new capability is critical to cater to e-commerce’s most prolific buyers.

Finally, there’s Visa.  We all saw the PayPal-Visa announcement last week.  While the media hypothesized what that agreement could bring to consumers, this Venmo announcement makes it real.  It’s where the rubber meets road.  The Visa agreement gives Venmo access to the Visa Direct service, allowing users to instantly load their Venmo accounts with a Visa debit card and go shopping.  No longer do consumers have to wait hours or days to load their Venmo accounts, but can do so moments before making in-app purchases.  This should drive significant growth for in-app purchases, especially among Millennials.

At the end of the day, it’s good news for consumers and merchants alike.  The real challenge remains with banks who continue to downplay the importance of P2P payments.  If they think the world of payments is passing them by, they need look no further than Venmo in-app payments.


About Michael Moeser

Michael heads Javelin's payments practice. He advises clients on the rapidly changing payments industry. Michael is focused on tracking the evolution of the payments industry, covering specific areas such as person-to-person payments, U.S. and global EMV card migration, digital wallets, merchant acceptance of different payment forms, cross-border payments, real-time transactions, and digital payments.

Michael specializes in assisting clients in developing new payment products or repositioning existing services to capitalize on market opportunities, understanding how to market to particular consumer and small business market segments, and developing new corporate strategies that can transform an existing payments franchise.

Michael brings over 20 years of experience from the payments and consulting industries. Before joining Javelin, he led the international small business card portfolio at Visa, launching new and growing existing debit and credit card programs with banks and financial services companies across the globe. Previously, he was the Head of Competitive Intelligence at Capital One, a Payments Knowledge Expert at McKinsey’s Payments Practice, and the Head of Product Marketing at Ondot Systems, a Silicon Valley mobile card control startup. He has presented to audiences around the globe, primarily at Visa and McKinsey client and public audiences.

Michael holds a BBA in finance from the Ross School of Business at the University of Michigan and an MBA in marketing and entrepreneurship from the Kellstadt Graduate School of Business at DePaul University.

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