- CEO Dan Schulman expects Venmo monetization
- Rapid recent growth looks promising
- No impact yet from competitors
Venmo has become one of the go-to apps for millennials looking for faster, cheaper ways to pay bills and send money to friends. The greater challenge for the PayPal-owned company, however, is sustaining profitability.
According to Dan Schulman, CEO of PayPal Holdings Inc., there is no need to worry about Venmo's slow climb to monetization. Schulman notes the already-apparent network effects of Venmo's platform and fully expects the payments provider to start showing a profit in the near future.
PayPal has been the parent company of Venmo since 2013. Since then, the app has become hugely popular with teens and young adults, yet PayPal has struggled to attract older users and expand the platform's appeal in order to make Venmo profitable. In late 2017, PayPal announced that the app could be used to make purchases via mobile at over 2 million US merchants and retailers.
Bill Ready, PayPal CEO at the time, promised users Venmo would become much more than simply a digital wallet optimized for P2P transactions. He said Venmo was poised to become "a ubiquitous digital wallet that helps consumers spend wherever and however they want to pay, regardless of device."
The growing popularity of the money transfers app is undeniable. Over the past six months, Venmo has added the most active account users in its brief history, processing roughly $10.4bn in payment volume in Q4 2017. This represents an increase of more than 86% year-on-year.
Yet some industry analysts believe Venmo's growth could be slowed significantly by competition from similar payments solutions. Recently, competition has been heating up. More than 30 major US banks, credit unions and other traditional financial institutions have teamed up to form Zell – an instant money transfer service aimed at Venmo's target demographic and beyond.
Schulman, however, sees no cause for concern and insists Venmo is continuing to build on a solid foundation.
"We're seeing no impact from Zelle or any others," said Shulman. "Banks have had peer-to-peer payments for 10 years."
