Venmo started out solely as a peer-to-peer payment app, enabling friends to efficiently send money to each other, such as when splitting a restaurant bill (read our overview of p2p payment apps). But now this popular, PayPal-owned platform is making significant inroads into the business sector. Over 2 million US retailers, small and large alike, now let customers pay with Venmo, a dramatic increase from the few thousand reported in July. These businesses aim to capitalize on the app’s 700 million plus users, over 80 percent of whom are millennials, to increase sales and raise brand awareness.
Which types of businesses can accept Venmo?
Venmo chose to limit the initial rollout of its merchant capabilities to online transactions, so it doesn’t yet support in-person sales. Eligible merchants need their own mobile app and/or mobile website. According to a Venmo spokesperson, "Thanks to the power of the PayPal platform, starting with the mobile web allows us to enable Venmo as a payment method for millions of PayPal merchants at one time without any additional integration work on the merchant's part." Merchants who already process transactions through PayPal do not need any special equipment to accept Venmo, nor will they accrue additional charges. Eligible merchants must also process transactions through a US business entity and be willing to use one of Venmo’s software development kits: IOS v4, Android v2, or JavaScript v3.
How does it work?
Customer Experience
For customers, the Venmo payment experience is entirely fee-free, and setup is relatively frictionless. They simply link their Venmo wallet to the merchant’s mobile app or website. The next time they need to pay that same merchant, reauthorization isn’t required.
Customers can fund purchases from their Venmo balance or from any saved payment method, such as a bank account or debit card. Paying through the app avoids the hassle of reaching for a wallet and pulling out a card. And it’s safer too. Merchants only see the customer’s name and, if shipment is required, their address. No account numbers get exposed.
As an added benefit, Venmo contains a social feed that lets users share purchases and associated feelings with friends. This feature lets the merchant leverage established peer-to-peer networks and enhance brand recognition.
Merchant Setup
Some retailers include the Venmo payment option within their own apps, while others operate within the Venmo app. Businesses can build and test their integration with the Venmo app in a Braintree sandbox. Braintree is a division of PayPal based in Chicago that focuses on payment systems for e-commerce. It’s known for easy integrations and simple payment interfaces.
Once you’re ready to go live, you’ll need to submit an application to Braintree. The application asks for a display name (maximum 120 characters), an image, and company contact information for inclusion in customer receipts. Once Braintree receives your application, they’ll work with you to review and approve your integration.
Merchant Fees
Whereas Venmo doesn’t charge consumers for peer-to-peer payments, it plans to get its money’s worth out of businesses. Merchants should prepare for the same processing fees as with PayPal (read our review). After all, why should it give away for free such a robust user base and impressive reach?
