Thursday, October 19, 2017
PayPal Inc. is launching a mobile assault on the retail POS. The online payments giant just proclaimed that consumers can now use their Venmo accounts to initiate mobile payments at millions of merchant locations where PayPal payments are accepted.
PayPal stated that over 2 million merchants now accept PayPal payments at their checkouts, including big-box merchants like Home Depot and Foot Locker, and over 7 million people use of Venmo, a mobile person-to-person (P2P) payment app especially popular with millennials. In a statement posted on Oct. 17, 2017, PayPal Chief Operating Officer Bill Ready said consumers can now use their mobile devices to initiate Venmo payments "almost everywhere PayPal is accepted."
Ready said merchants will find the new payment option "very appealing," as they "can reach a new audience of shoppers, many of whom skew millennial and engage with Venmo multiple times throughout the day."
Industry experts agreed. "Venmo has a social feed where consumers can share their most recent purchases with friends and family, which will essentially expose merchants to potential shoppers and give them a new platform for engaging with current customers," Ayoub Aouad, Research Analyst at BI Intelligence, wrote in a recent post. And using the new mobile payment feature doesn't require any new integrations, he noted.
Casey Gannon, Vice President of Marketing at mobile commerce platform provider Shopgate described the move as "an irresistible checkout incentive" for Venmo users. "Venmo, the ubiquitous mobile payment app for the coveted millennial shopper segment, as an in-app payment option will provide real value for retailers looking to increase conversions within this demographic," Gannon said.
Venmo is a P2P payment app that PayPal obtained when it purchased Baintree in 2013 for about $800 million. Baintree, a payment gateway, had purchased Venmo just a few years earlier for about $26 million, according to published reports.
P2P payments have become wildly popular with U.S. consumers. Aite Group LLC estimates Americans will make $1.2 trillion in P2P payments this year alone. P2P payments, once dominated by PayPal, have become a highly competitive market, however. Bank initiatives, like Zelle, along with numerous nonbank competitors that include Facebook, Google and Square, all are vying for some of this P2P action.
But P2P payments don't generate much in the way of revenues, as most providers charge consumers little or nothing to make payments to family and friends. Merchants, on the other hand, are accustomed to paying for electronic payment acceptance . "Hypothetically, if retail sales [through Venmo] equaled half of P2P payment volume in Q2, and PayPal charged its normal 2.9 percent transaction fee, the company would've seen $116 million in transaction fees," Auouad wrote.
Venmo has stiff competition. Zelle, for example, boasts a potential user base of 85 million bank accountholders, and Apple is said to be readying P2P payment support for its mobile app, Apple Pay. But Auouad suggested the combination of PayPal's payment network and Venmo's social feed could provide the company with strategic advantage.
Ready brought this up in PayPal's official statement as well. He wrote that "the Venmo social feed represents an entirely new way for merchants to increase awareness and open new purchase opportunities." And he said the move already has prompted "some of the largest and most influential U.S. merchants" to inquire about accepting Venmo mobile payments.
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