Venmo Business Model – How Does Venmo Make Money?

Everything is digitalized!!!

People can connect with their dear one the move. Capture the beautiful moments and store them forever on the cloud. The advancement in technology is making wanders. Let’s discuss the new invention “digital wallets”. The digital wallets are known as e-Wallets. These are financial or economic accounts that allow people to store their funds. On the other hand, within a few simple clicks, they can make payments and track their payment histories without any hassles.

Raise your hand if you’re the one who sends and receive payments regularly. You might be probably looking for the convenient, safe and faster way to transfer money. Since there are thousands of payment applications available online. But finding the right one can be a pretty daunting task for you. People need to be careful while sharing their sensitive information on the application. You just cannot trust every payment application available in the market. If you’re the looking for the best payment application to make your transaction, look no further than “VENMO”.

What is Venmo?

Venmo – Share Payments

Venmo is the leading transfer application available around the world. The application originally operated by “Braintree”, it was acquired by “PayPal” in 2013. It is the fast, safe, secure and social payment. There are over 60 million users are using the Venmo application. The net worth of Venmo is $38 billion in 2020.

Venmo is a popular social media app that simplifies the transaction between individual and business with the twist of social media networking. Venmo is the perfect combination of Facebook and Paytm i.e social media app and prepaid wallet. The application is pretty popular and safe application among the US millennials.

  • Mobile-oriented design
  • Transfer funds
  • Split bills
  • Send payments to more than 2 million merchants around the world
  • Request payment from person or business
  • People who are connected can look at your comments and reactions.

History

Venmo was started by two close friends “Andrew Kortina and Iqram Magdon-Ismail”. Their ultimate goal was to design an application to send money via mobile. The original prototype of Venmo is included transferring the funds via text messages. Later the application has transformed into an excellent mobile app. As mentioned earlier the company was acquired by “Braintree” in 2012 for 26.2 million dollars. Then after one year, the company was acquired along with “Vemo” for $800 million in 2013.

Venmo Business Model

Did you know, Venmo has the smart business model that is dedicated to millennials. On the other hand, the company is helping its users by offering excellent services and making their awkward task easier. The task can be splitting of bills, transferring the funds, commenting and more. The best part of Venmo is presenting social media newsfeed on its platform. Here users can share and view the transactions history of their dear ones in the most existing manner.

Let’s discuss the reasons why Venmo is running in success. The primary reason is that the Venmo application split the bills. During olden days, people need to deal with late or delay transactions and tracking history is the most difficult task. Also, sending money requires two or three business days. This was an awkward moment. Therefore users are switching to Venmo and transferring their funds in no time.

How Does Venmo Work?

Sending payments is fun with Venmo. With the application, you can connect with dear ones right from your mobile. Transfer funds the one who resides at the corner of the globe.

  • Split the necessities
  • Send a gift
  • Split your bills by sending half of your rent to your roommate
  • Send payments of your cab fare to your friend
  • Venmo debit cards are accepted in the United States.
  • Make payments local or online. More than one million merchants are accepting Venmo
  • Venmo application is offering tricks and tips to enable high-level up settings
  • Manage your money effectively with Venmo
  • No hidden fees are encouraged

Impressed right!!! Creating the account and transferring the funds is simple at Venmo.

Create an account on Venmo and link your mobile number and registered email if. Once you get successfully registered, you can use Venmo to make payments through several sources such as Venmo balance, credit or debit card and U.S. bank account.

Venmo is not just a money transferring application but it also makes its users a part of a social channel. It means users can see, react, like or comment on their newsfeed.

How Does Venmo Make Money?

Downloading the Venmo application is free. Then you might be wondering how does Venmo has earned $38 billion in 2020. There are various sources for Venmo to generate income. Venmo is making good money via transaction charges. As already mentioned earlier, users can transfer money through debit card or net banking, there is no transaction fee is applicable. But users who are transferring money through a credit card are charged 3% on the total amount. This way Venmo is making money through credit card transactions. Whenever a uses pay via Venmo API, the business needs to pay a 2.9% fee.

As per the analysis, Venmo has processed with more than $14 billion payments in 2016. And the Venmo net worth was $200 million in 2018. Currently, the annual revenue of Venmo is $38 billion in 2020.

  • The instant fund transfer is 50%
  • Pay via Venmo money is 25%
  • Venmo cards have almost 26% of transactions

Venmo was acquired by PayPal, the company is earning a good income from several sources such as credit card fees and merchant fees. Nevertheless, unlike PayPal application, Venmo has not implemented the concept of collecting interest on the funds that are kept as Venmo money.

Venmo business model has been divided into 2 parts such as

  • Credit card fees
  • Merchant fees

Credit Card Fees

Let’s discuss primary source i.e credit card fees. Venmo is offering its users its account system, whenever user choose to send payments using Venmo balance, there are no charges are applicable. Besides people who are processing their payments through debit card or won linked bank accounts can make them call lucky. Because no charges are applicable to your transactions. But if you’re a credit card holder and processing your payments through Venmo, you need to pay 3% of your total amount of the payment.

Merchant Fees

PayPal was acquired Venmo in 2013. This is the biggest move for the company in tapping their revenue source. There are millions of merchants are accepting the payments through Venmo. The merchants can be both online and offline. All the merchants that are willing to accept their payments via PayPal are now accepting Venmo as their payment option. Sounds amazing right!!!

The merchants need to pay a 2.9% + fixed charges on every transaction made through Venmo.

Here the integration of Venmo application has been benefited for both users and merchants. Users can pay their payments within few simple clicks through their mobile payment application i.e Venmo. Businesses can acquire more customers through social networking.

To increase the net worth in the upcoming years, the company is planning to make a partnership with the popular food business. Venmo has partnered with popular application i.e Uber. This helped Venmo to increase their net worth. Well, this is how Venmo is earning a good income.

Is Venmo Safe?

This question might be hitting you right from the beginning. Here is the answer for you.

Venmo uses high bank-level security and safety on their application. The data encryption is implanted to secure sensitive information and transactions from third party resources. Ultimately, the application will guard you against the unauthorised users. However, users cannot make transactions to unknown people. The additional security is also provided by setting a pin or touch password to access the Venmo.

Wrapping Up

Want to make payment at a coffee shop? Yes!!! Take your mobile and process payment without hassles through Venmo. As already mentioned, Venmo is the leading mobile payment app available online. Users can split their bills, send gifts, send money and more. In this article, hope you understand what is Venmo and how it’s generating its revenue. The application is available for free. The transactions processed through debit card and Venmo money doesn’t be charged. The company has earned $38 billion in 2020. The primary sources of income are credit card and merchant fees. In the upcoming years, Venmo is planning to acquire food business and make their revenue double in the upcoming years.

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