Venmo has become popular among millennials both as apeer-to-peer transaction tool, and, to a lesser extent, a social networkingtool, but it still needs to build a revenue base, Bloomberg Businessweek reports.
Since starting in 2009, Venmo’smash-up of personal finance and social media has proven especially compellingto college kids and urban professionals age 30 and younger. The app first tookoff primarily in large coastal cities such as New York and San Francisco and isnow sweeping, smartphone by smartphone, across the rest of the country. Venmoexecutives decline to disclose how many individuals are using the product, buttransaction volume on Venmo is growing fast. In the third quarter of 2014, thecompany says, it processed $700 million in payments, up from $141 million ayear earlier.
Despite this growth, the company needs to build a revenuebase. Rather than asking users to pay, it plans to focus on the merchants whoaccept it.
The way Venmo will make its money,Ready explains, is not by charging consumers for transactions but by chargingmerchants.
The Venmo experience shows some of the issues that paymentsstartups will face in the future. Companies will need to do more than solve aconsumer problem – they also need to solve the revenue problem that comes withkeeping a business viable. The question is how exciting will Venmo be tomerchants who are already inundated with ways to accept payments.