Venmo, Venmo, Venmo? Sounds like a Latin proverb doesn’t it, but if your ears didn’t perk up right away at the name of this break-away payment startup, then pay attention.
Venmo is a hybrid that combines a smartphone payment app with a social network and has become one of the Millennial generations go-to apps. According to Business Week, Venmo’s on fire: in the third quarter of 2014, Venmo said it processed $700 million in payments, up from $141 million year-over-year. That is still just a fraction of the ~$5T US payments card market in 2013 (Nilson Report), but the growth is staggering.
Payments, social networks and emoji
Venmo allows users to send payments to each other with their smartphones, a capability that is extremely popular with rent sharing, tab-splitting twenty-somethings. Reimbursing a friend no longer involves cash –– since 25% of millennials have less than $5 cash on them seven days a week (Independent Community Bankers of America)–– or a trip to the ATM, since millennials hate bank fees(FICO Millennial Banking Study - Wave 1). With a few swipes, they can instantly transfer funds to their friends via Venmo. One of the best parts is that it only takes a day to pull money out, no multi-day holds.
By design, there’s a big social component to Venmo, too. When users join, they link up with their Facebook account (or e-mail). Sending a payment to a friend includes filling out a field that describes what the payment is for. Users can adjust Venmo’s settings to keep transactions private, but most don’t. The dollar amount is stripped off the transaction and the update is shared with both parties’ networks of friends. Millennial-style humor ensues: sarcasm, bombast and emojis.
Not your parents’ payments
At FICO, we found out first-hand how popular Venmo is, and why Millennials love it. Check out this video mash-up of “person on the street” interviews we recently did with a group of Millennials.
As one of the interviewees says, “If you had any senior banker have real conversation with his son or daughter … and learn how they’re using Venmo payments …. their head would explode a little bit.”
For more humorous banter that underscores the differing views of Millennials and over-35s on Venmo, check out this exchange on Quartz.
Even SnapChat is getting into the act with SnapCash.
Braintree (payment provider for the likes of Uber, Airbnb, TaskRabbit and OpenTable) snapped up Venmo back in 2012. PayPal then snapped up Braintree in 2013. With its newfound independence from eBay it will be interesting to see how they leverage the strong Millennial customer base for new payment options.
Learn more about Millennial banking habits from our two recent consumer surveys.