Venmo is a popular—especially among college students and 20-somethings—payment service that allows users to transfer money to another person using a mobile app. (Think, splitting a dinner tab or paying your roommate for your half of the monthly rent.) Venmo charges no fee for such person-to-person financial exchanges, but has prohibited people from using it to purchase merchandise. According to PayPal, the owner of Venmo since 2013, that policy will change as soon as the payments giant begins allowing merchants to accept it as a form of payment anywhere that PayPal is already taken.
PayPal CEO Dan Schulman told analysts last week (10/27/2015) that PayPal will target merchants that already accept payments through PayPal and that Venmo will be “fully monetized by the end of next year.”
This won’t mean any fee changes for Venmo users—transferring money to friends will still be free (except for fees related to funds drawn from a credit card). Merchants will likely have to pay the same transaction fees they are charged for accepting PayPal transactions (2.9 percent of the transaction price, plus an extra 30 cents).
According to Schulman, Venmo processed $2.1 billion payment volume in the most recent quarter, up from $1.6 billion in the previous 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.”