Oh, shoot! I forgot my wallet at home, and I’m at the grocery. Well, no worries. I have Venmo with me on my phone. At least, I’m saved.
If you’re contemplating downloading a digital wallet, you should. These digital wallet apps, such as Venmo and PayPal, ensure that we have access to our cash anytime. But, you may be wondering how they make money from all those transactions.
For this article, I will talk about what Venmo is and how Venmo makes money from its services. Seems complicated? Let’s check it out.
With the advent of technology, people have sought many ways to make life easier and more convenient. A few clicks on your mobile device and you can have your food delivered to your doorstep, your schedule updated, your bills paid, your grocery shopped for you, and many more.
This is why the concept of online payments and digital wallets is very much enjoyed by many. Venmo is one of the digital wallet systems aimed at giving people the comfort of clicking and having their money sent for payment. Its straightforward user interface has been the company’s magnet in the market, which has led to being one of the most preferred payment systems worldwide.
What is Venmo?
Owned by the top company for online payments, PayPal, Venmo is a leading brand in the digital wallet industry. It has made a name of its own. Via Venmo’s unique public feed, the user’s transactions such as shopping, purchase of cinema tickets, or paying bills can be seen by his friends and relatives.
As per a Venmo representative, they made the app available for public consumption because seeing what your friends or relatives are doing is for the interaction of the users. However, the representative also noted that the client may turn their feed private through the app settings. Venmo assured its clients of its data security despite the public feed option.
Back in 2009, when the company was founded, this was not the case. Venmo was only operational through text messages where their clients did the payment and other transactions. It was three years into the operations when the company decided to back up its payment system with a social networking concept.
Venmo has been running for a decade, and it is a widely accepted payment scheme by over two million stores and merchants. Clients have continuously patronized the convenience of doing transactions through this specific app. Here are the selling factors of Venmo.
Advantages of Venmo
Venmo is a peer-to-peer (P2P) payment system where you can send and receive money among other users. Venmo has strong points to sell its brand. Here are some of them.
1. Several people use it
In the US, numerous individuals have patronized Venmo for their cash transactions. And since Venmo is sort of a social networking site, many people use it to interact and connect with their friends. Their vast market plays a huge part in the company’s success because many use the app for easy sending and receiving of money.
This advantage has played successfully for brands and companies that use Venmo. It is easier for their market to buy products because Venmo is available in their store. Using Venmo is a win-win situation for everyone who uses it.
2. Effortless monetary deals
Venmo has an easy user interface, which their users find very undemanding. The waiting time for cash transactions is short and bears less stress for users. Their interface enables users to remind other users if they need to pay up; this is applicable for individual and business users alike.
3. Security features
PayPal operates Venmo. Their security system flows similarly. Users are always given the assurance of a safe and secure network through which they can have their monetary exchanges.
The advantages of Venmo have played profitably for them and their partner brands. It has convinced and will convince many more people to use Venmo for effortless, stress-free cash transactions in the future.
Linkages of Venmo
Since its conception ten years ago, Venmo has continuously evolved into its current successful brand. The market has embraced its brand. Along with this, the surge of payment transactions in different stores also changed. People have continually looked for stores with Venmo as a mode of payment.
This is just what brands did. Numerous companies made Venmo available for their customers. Customers who found Venmo convenient to shop for their products were attracted to this scheme.
Aside from being a consumer magnet, the linkage of Venmo with other brands and stores helped increase its profitability. Many Venmo users utilized instant cash transfers for payments. Stores also used Venmo for online shopping. It made online checkout faster for many online shoppers.
Profitability was very much present for both Venmo and their partner brands because advertising was no brainer for them. Tying up with other social media companies, Venmo was able to reach a bigger market among frequent online consumers. The increase in partnership proved very successful for Venmo driving it to further market sensation.
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Products and offers
The public feed option available on Venmo makes it very unique for many of its users. This feature of the payment system is used for the communication of many users. “I’ll just Venmo it to you.” – this is the statement that bore out of it. It became a catchphrase because of the number of Venmo users in the US.
Venmo’s social networking has somehow helped it gain a wider reach to its consumers. Some experts would say it was easy advertising. Well, any company would agree that advertising plays a vital role in the company’s success. It can shoot the sales of the brand through the roof if done correctly.
In 2018, it launched its “Venmo Card.” The Venmo Card is a Mastercard® debit card that users may use to perform transactions physically. It was linked to one’s account for fund sources.
Its design was meant to match the preference of the consumer – easy and straightforward. Venmo users can use the card to withdraw at designated ATMs. The card was not swiped but rather tapped, making transactions easier.
Through the Venmo card, Venmo users were also able to use their Venmo Rewards from partner brands and stores. Consumers can redeem their reward points for cash transactions and the same is stored in their accounts.
Security is not an issue for the Venmo card. If you lost it, you could disable it through the Venmo app. This way, the person who attempts to use it will be denied access to your account.
Safe, simple, convenient – this is Venmo’s brand promise to its consumers. The company has plans to expand its features and services to enhance the transaction experience of their market.
For more information on the Venmo card, click here.
Securing your Venmo account
The whole monetary exchange will not be possible if you don’t secure your account. Doing so will help you have smooth-flowing access to your account. To fully secure your account, here are important reminders.
1. Construct a distinct PIN code.
The PIN code is your password. Never give you PIN code to anyone, even your relatives. This makes your account personal and authentic.
2. Complete the verification process.
Log-in with an accessible email account that you use often. Verify all the information you input to be sure of all data to be used for your account.
3. Transact only with accredited and trusted accounts.
Sending and receiving money should be done between people you trust. This is for your security so that distrusted people will not have to access your account.
4. Use a secure internet connection and mobile device.
Public WiFi access is not advisable when getting into your account. Confidential information passes through this connection, making it more prone to hacking or phishing. It is also advisable to use your phone or laptop to prevent any data from being stored in another person’s device.
Venmo uses security encryption codes for all its users. If unauthorized activity is seen, you may contact Venmo through firstname.lastname@example.org. Their account security has helped Venmo gain more users. It has been an assurance for the market that they are using a secure network in transacting.
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Using Venmo for transactions
Cash transactions have been made easy by using Venmo. Whether it be online or personal, Venmo can help with monetary exchange concerns. Here’s how you can use Venmo for payments and the like.
Friends or acquaintances with whom you’ll be transacting may be added through Venmo. The social network concept of Venmo is useful with this. You can search their name or username and add them to Venmo.
You will need to take note of the account name or phone number. For payment or receiving payment to be possible, the account number of the concerned party is required. If you have granted access to your contacts, it may be easier to locate and connect with the people you’ll be transacting with.
Funding is not a problem with Venmo. Linked bank accounts will be a source of funds in case of insufficiency in your Venmo account. When you swipe the Venmo card or transact online, your bank accounts will serve as the fallback if your Venmo lacks a deposit.
Always check your Venmo account. Regularly monitor the activity of your account. This is not to count your money, but for assurance. Constant observation of your account does help you check the inflow and outflow of your money.
In the case of merchant payment, select Venmo as your mode of payment. Check this for the list of partner stores.
Cash deposits and withdrawal is possible through Venmo accounts. This has been the source of profit for Venmo. Seeing how the transaction process of Venmo is, it does have a smooth flow. This proves that Venmo is after the comfort of its users.
How Venmo earns from its clients
With around 52 million users, Venmo is widely used in the US. The profit made by the company is credited to three primary sources – its transaction fees, partnerships, and its less spending in advertising and marketing. Each has served its purpose to the market and the company.
Pay with Venmo, and Instant transfer has fee charges for every transaction. Whenever a user transacts with a debit or credit card, Venmo has a 3% charge for the usage of its network. This is the least fee charge across the online payment industry. The minimal cost has enabled users to enjoy the perks of it.
Venmo only has a day of processing for the concerned parties to receive the money. The convenience of the market is present. It makes the fee paid worth it. Venmo has collected around $102 billion in payment transactions in early 2020.
The cash transfer is the most used feature of Venmo because it’s convenient to use. Out of the three sources, instant transfer is pinpointed as the most significant contributor.
The transaction fees of Venmo are available here.
In a study conducted by eMarketer, mobile transactions of peer-to-peer payment systems are expected to grow to $396.48 billion. More people would be looking at companies such as Venmo to use in their online purchases.
Using the card entails no charges. However, ATM withdrawals will have a $2.50 charge for domestic transactions and a $3 for over-the-counter withdrawal. The fees are charged when the financial institution requires a signature from the account holder. As some users prefer the Venmo Card, transactions made through it contributes to Venmo’s profitability.
As of this writing, Venmo is improving the Venmo card features to enhance its revenue inflow for the company. They are also set to release another card for Venmo users.
Venmo earns its profit from its collaborations from different brands. Companies such as Uber, GrubHub, and more pay a 2.9% fee plus a standard fee for transacting through Venmo. Over two million stores in the US have partnered with Venmo. Just imagine the revenue that Venmo earns.
Cost cutting in advertising
Another part of its profit is credited to its cost-cutting in terms of advertising. An online connection is essential to market a company. Seeing a friend eat a delicious meal or buy a good pair of shoes attracts people to find the products. This is how Venmo is different from other companies. Its social network through the public feed has made advertising easier and less expensive for the company.
Various points in its business model, monetize Venmo. Many more effective plans are to be launched by the company in 2020. As PayPal stated, they are aiming to develop the features of Venmo to entail a higher revenue in the coming years.
Venmo proves that high charges do not necessarily stand useful for a company. It is easier to increase your market if they see the affordability of your products and services. Your affordability must be paired with quality service for the consumers to come back and attract more users regularly.
Venmo is a peer-to-peer payment system aimed at making cash transactions convenient and simple for many. Widely used in the US, Venmo has a broad scope of partner companies making consumers more reachable to an array of products and services.
Security is a priority of any online payment system, especially for Venmo. Verifying all information is a must to secure your account and transactions.
The future of payment systems lies in the digital realm. Online transactions have made life less stressful and more opportune for many. The profitability of companies increases with their participation in these online systems to reach a wider market.
Making money with Venmo serves the company and the consumers. Consumers have their money available easily with Venmo offering good service. Venmo profits from its numerous users. The profit of Venmo is credited to its market, the people they are serving convenience and comfort.
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