Founded in 2009 by two university roommates, Venmo is a P2P (peer to peer) money transaction service that allows users to link up their payment methods and share transactions within their network.
Since PayPal acquired this app in 2013 under Braintree for $800 million, Venmo has been the go-to for many users to send and receive money easily on their mobile devices.
The app is especially popular among the younger demographics. College students pay each other frequently via this channel, due to its free and convenient nature.
Businesses opt-in this payment option to tap into the valuable target market of young people, encouraging them to buy their products and services.
The application also has a social feed with which you can share comments on every transaction that you make.
This feature is beneficial to the businesses that include Venmo as a payment option for their clients as it brings them social advertising.
With Venmo, you can perform activities like splitting bills, requesting money from someone else, and paying cash to merchants online and offline.
Also, you can send money to someone else, and using its social feed to post and see what you and others are spending money on.
Despite the benefits that Venmo offers its users, its use is mostly free.
This brings a question to mind, which is, how does Venmo make money?
Venmo does make money by charging authorized merchants when you purchase products and services.
The main revenue-generating aspects of Venmo’s business model, the app charges businesses a 2.9% fee when consumers use the app to pay.
Or, in other words, businesses are charged a 2.9% fee whenever a customer uses the Venmo API to pay them.
If you are using your bank account or debit card to connect to Venmo, your transactions are free – but, if you are using a credit card or are a business using Venmo, you will have to pay a 3% fee of whatever the total value of the transaction is.
This is one of the principal ways Venmo makes money off of customers since the app doesn’t currently charge interest on funds
As of July 2020, Venmo has partnered with Uber as a payment method. Riders and customers with Venmo installed on their device can now use Venmo to pay for their Uber rides and Uber Eats order
Venmo being the first mainstream P2P payment app to market, provided simple and costless transfers from one person to another, a service that conventional banks were slow to provide.
Let’s see what the future hold for our friends at Venmo.
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