Paypal’s Big Plan for Venmo in Re­tail Sales

Venmo is the go-to brand for P-to-p pay­ments, but can it do the same for re­tail? And does that mean Paypal has to down­play its own brand?

ISO & Agent - - INSIDE 11/12.2017 - BY DAVID HEUN

Venmo is well es­tab­lished as a tool for P-to-p pay­ments and so­cial in­ter­ac­tion. And mer­chants should take note as Paypal brings Venmo into the spot­light as a means of re­tail pay­ments.

Paypal’s lat­est move to pro­mote Venmo for re­tail pay­ments may be the com­pany’s clear­est ad­mis­sion of the lim­i­ta­tions of the Paypal brand. Paypal has a long his­tory of buy­ing brands that it could not de­feat in the mar­ket, and Venmo is no ex­cep­tion. Other ex­am­ples in­clude Billme­later (now Paypal Credit) and Brain­tree ( Venmo’s owner at the time of the ac­qui­si­tion). But Paypal never seemed par­tic­u­larly threat­ened in its pri­mary mis­sion of on­line and P-to-p pay­ments — un­til Venmo came along.

Venmo some­how suc­ceeded where years of up­starts failed, to the point where Paypal is now com­fort­able putting Venmo’s own brand be­fore its own. In the new setup, Paypal is test­ing dy­namic pay­ment but­tons that swap in the Venmo brand for Venmo users when vis­it­ing mer­chant web­sites.

While this gives Venmo users the op­tion of shop­ping at more than two mil­lion mer­chants, it also con­cedes that Paypal may never con­vince Venmo con­sumers to think of them­selves as Paypal users. De­spite the risk to the Paypal brand, the com­pany sees this as a pos­i­tive de­vel­op­ment.

“We’re see­ing in some in­stances that the ap­peal of Venmo has prompted some of the largest and most in­flu­en­tial U.S. mer­chants to ex­pand ex­ist­ing, or be­gin new, pro­cess­ing re­la­tion­ships with PayPal,” Bill Ready, chief op­er­at­ing of­fi­cer at Paypal, said in an Oct. 17 blog post.

As much as any­thing, it puts Venmo in the fore­front of a prom­ise that mo­bile pay­ments has made since its in­cep­tion — that it is easy for users to split the cost of pur­chases among friends and share pay­ments on the Venmo feed.

“My kids go out and buy things jointly a lot, some­times as a gift, or some­thing for them­selves, but some­one wants to pay for part of it,” said Steve Mott, principal of Bet­ter buy de­sign, a Stam­ford, Conn.-based con­sult­ing firm.

“It’s very easy to do with Venmo, and that’s a dif­fer­ent life­style that the pay­ments in­dus­try re­ally hasn’t stepped up to,” Mott said.

Venmo has grown to the point where the P-to-p ser­vice cre­ated two years ago to lure older age groups may not even be nec­es­sary. It ap­pears Paypal re­al­izes by lever­ag­ing Venmo and its in­fra­struc­ture it is “cre­at­ing a new con­duit into the fu­ture of dig­i­tal pay­ments where it is more of a so­cial in­ter­ac­tion,” Mott added.

And that also ap­pears to be a ma­jor sell­ing point for Paypal and Venmo as it ex­pands re­tail reach.

The move al­lows mer­chants to con­nect with a new au­di­ence of shop­pers, many of whom en­gage with Venmo mul­ti­ple times a day, Ready said in the blog post.

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