This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.
Updated by Albert Fang
What is Venmo?
Venmo often describes itself as a digital wallet. It is a web browser or mobile app that allows people to send payments to others on the network in the United States. The payment service is owned by Paypal. Once Paypal came to be the owners of Venmo, they adjusted the app to be able to transact with any merchants that accept Paypal.
How does Venmo work?
Venmo works as follows: an interested person downloads the app and then transfers cash to the app by bank transfer, which can take up to three days. Most transactions that involves a debit card is peer-to-peer and instantaneous. At maximum the money is loaded onto the platform and available to use by the 3rd day mark. The cash transfer option, like a banking transaction, can take up to three days to move from account to account. The app claims to encrypt all user data and transaction information so that the application is safe and secure.
How does Venmo make money?
Venmo is able to make money by charging a 3% fee on payments conducted by credit cards. This is currently the only way that the company is able to make money. The reasoning behind this is that Paypal, the parent company generates enough revenue on its own and Venmo acts as outreach to bring more customers under the Paypal payment solution umbrella. The fee for credit card payments is said to cover total operating expenses for the company.
Recent developments
The most recent big development for the company was when Paypal extended the use of Venmo to all merchants. From here there has not been much news, but there is a lot of talk about how to further monetize this popular app. They are working to combine additional apps to integrate the Venmo P2P functionality with the ability to purchase things such as baseball game tickets through Gametime, or meals through Munchcery. These adaptations are just the beginning of what the company could be doing. In case anyone is interested in creating new developments within the company, they are currently hiring, also.
Fun fact
The app was actually created by a couple of best buds in college. They would always be borrowing cash from each other and wanted a better way to keep track of it and be sure that they were paying each other back. Just to put it in perspective, the company handles over a billion dollars in transactions a month.
Reviewed and edited by Albert Fang.
See a typo or want to suggest an edit/revision to the content? Use the comment form below for feedback.
At FangWallet, we value editorial integrity and open collaboration in curating quality content for readers to enjoy. Much appreciated for the assist.
Did you like our article and find it insightful? We encourage sharing the article link with family and friends to benefit as well - better yet, sharing on social media. Thank you for the support! 🍉
Article Title: How Does Venmo Make Money?
https://fangwallet.com/2018/07/25/how-does-venmo-make-money/The FangWallet Promise
FangWallet is an editorially independent resource - founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.
The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.
Become an Insider
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author's alone.
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.
Source Citation References:
+ Inspo
Investopedia. (n.d.). Investopedia. https://www.investopedia.com/
Wikipedia, the free encyclopedia. (n.d.). https://www.wikipedia.org/
Fang, A. (n.d.). FangWallet — Personal Finance Blog on Passive Income Ideas. FangWallet. https://fangwallet.com/
Google Scholar. (n.d.). Google Scholar. https://scholar.google.com/
2 Comments
Good article.
Keep writing.
I learned something today.
Thanks for sharing. This has been on my mind for awhile now.