PayPal highlights Venmo profit strategy

bySuman Bhattacharyya

January 30, 2020

in Banking, Payments, Strategy

Reading Time: 2 mins read

PayPal reports that peer-to-peer payments tool Venmo is on a path to profitability.

In a fourth-quarter earnings report Wednesday, PayPal CEO Dan Shulman told investors the company is pushing ahead on its Venmo monetization strategy. Key enablers include Pay with Venmo, which allows consumers to use the tool to pay at millions of e-commerce sites. In addition, a soon-to-launch Venmo credit card in partnership with Synchrony Financial and Visa is expected to drive growth.

“We’re adding new capabilities all the time. We’re going to put a big emphasis on Pay with Venmo,” Shulman said. “Goods and services are one of the biggest moneymakers on the PayPal P2P side. We’re going to add that into the Venmo side, and there are a number of other monetizable services that you’ll see.”

PayPal reported that Venmo processed $29 billion in payment volume for the fourth quarter of 2019, growing 56%. Meanwhile, payment volume in 2019 increased to $102 billion. Venmo’s customer base exceeded 52 million active accounts by the end of last year, driving a revenue run rate of more than $450 million.

Peer-to-peer payments haven’t been a moneymaker for PayPal, but Shulman noted that the company is beginning to see losses reduce each year because of monetization initiatives in place. He said the company has a “line of sight” on the point at which Venmo will reach breakeven and profitable status. Venmo was brought under PayPal’s wing when it acquired Braintree in 2013.

Retail rewards as in-app cash: Venmo embeds with loyalty programs

Shulman also highlighted the recently launched Venmo Rewards program with select merchants, in which merchants fund rewards converted to Venmo dollars directly deposited into customers’ accounts. Notable brands using Venmo payouts for rewards include Netflix, Pepsi and Chipotle. Shulman noted that the Venmo debit card’s reach continues to expand, and that the company is “pleased with the economics” around the yet-to-be-released credit card product.

Looking ahead, the company reported that it will launch new revenue-generating features on Venmo later this year.

“We’re excited to introduce new, monetizable, value-added services through our Venmo platform over the course of 2020,” he added.

In the fourth quarter of 2019, PayPal reported $4.96 billion in revenue, up from $4.22 billion during the fourth quarter of 2018.

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